LMI FUNDS, N-1A, 2000-08-18

LMI FUNDS
N-1A, 2000-08-18

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<PAGE> 1
As filed with the Securities and Exchange Commission on August 18, 2000
1933 Act Registration No. 333-____
1940 Act Registration No. 811-____

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]

------------------

LMI FUNDS
(Exact Name of Registrant as Specified in Charter)

60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code:
(617) 557-3416

CHRISTOPHER J. KELLEY
LMI FUNDS
C/O FUNDS DISTRIBUTOR, INC.
60 STATE STREET, SUITE 1300, BOSTON, MASSACHUSETTS 02109
(Name and Address of Agent for Service)

Copies of communications to:
Joseph B. Kittredge, Jr., Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.

<PAGE> 2
[front cover]

--------------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
--------------------------------------------------------------------------------

LMI FUNDS

LMI SMALL CAP GROWTH FUND
LMI MID CAP GROWTH FUND
LMI SMALL CAP TAX-SENSITIVE FUND
LMI TECHNOLOGY FUND
LMI INTERNET FUND

A SHARES
B SHARES

PROSPECTUS

[prospectus date]

The Securities and Exchange Commission (SEC) has not approved or disapproved the
Funds' shares or determined whether this prospectus is adequate or complete. Any
representation to the contrary is a criminal offense.

[LMI Funds logo]

<PAGE> 3
TABLE OF CONTENTS

ABOUT THE FUNDS

MAIN RISKS

HOW TO BUY AND SELL SHARES

SALES CHARGES AND RELATED PROGRAMS

SHAREHOLDER INFORMATION

MANAGEMENT

FOR MORE INFORMATION Back cover

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ABOUT THE FUNDS

The following describes each Fund's investment objective, main investments and
strategies, main risks, and fees and expenses. Another section, MAIN RISKS,
further describes the Funds' main risks and begins after this section.

An investment in a Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

LMI SMALL CAP GROWTH FUND

OBJECTIVE
The Fund seeks long-term capital growth. There can be no assurance that the Fund
will achieve this objective.

STRATEGY
The Fund invests primarily in equity securities of smaller capitalization (small
cap) U.S. companies. The Fund focuses on companies with total market
capitalizations within the range of total market capitalizations of companies
included in the Russell 2000 Growth Index. This would correspond to companies
with total market capitalizations of less than [ ] as of [date].

The investment adviser employs a growth oriented investment style in managing
the Fund's portfolio, which means the investment adviser seeks to identify those
companies that are experiencing or will experience rapid growth. The investment
adviser focuses on individual stock selection instead of trying to predict which
industries or sectors will perform best.

In making investment decisions, the investment adviser assesses whether a
company's fundamentals -- financial condition, management, and position in its
industry -- indicate strong prospects for earnings growth. In making this
assessment, the investment adviser may consider such particular factors as a
company's market share, projected earnings, cash flows, technology leadership,
patents and other intellectual property, marketing prowess and product
development capabilities. The investment adviser invests in companies that it
believes will experience accelerating revenues and expanding operating margins,
which may lead to rising estimate trends and favorable earnings surprises.

The Fund may sell securities for a variety of reasons, such as to secure gains,
limit losses, or redeploy assets into more promising opportunities.

The Fund's investments may include companies making initial public offerings.
While most assets will be invested in U.S. common stocks, the Fund may invest up
to 25% of its total assets in foreign securities (measured at the time of
investment). The Fund also may invest in other securities, including other
investment companies and futures and options, in keeping with the Fund's
investment objectives.

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RISKS
Investors could lose money on their investments in the Fund, or the Fund could
underperform other possible investments, if any of the following occurs:

- The U.S. or foreign stock markets go down.

- Small cap stocks fall out of favor with the market.

- The markets favor stocks with "value" characteristics over growth
stocks.

- Negative market sentiment towards, or events affecting issuers in, the
technology, health care, business services and communications sectors
or other sectors that traditionally have included a large number of
growth stocks.

- An adverse event, such as an unfavorable earnings report, depresses
the value of a particular company's stock.

- The investment adviser's judgment about the attractiveness, value or
potential appreciation of a particular company's stock proves to be
incorrect.

SMALLER COMPANY RISKS. The Fund is subject to additional risk because of its
focus on small cap stocks. Smaller companies may have limited product lines,
markets and financial resources. They may have shorter operating histories and
more volatile businesses. The prices of smaller company stocks, and in
particular aggressive growth stocks, tend to be more volatile than the prices of
stocks of companies with larger market capitalizations. In addition, it may be
harder to sell these stocks, which can reduce their selling prices.

WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

- are seeking capital growth over the long term (at least five years)
and are willing to ride out market swings;

- are looking to allocate a portion of your assets to stocks with
above-average volatility;

- are comfortable with the risks of the stock market;

- are not seeking a substantial amount of current income.

LMI MID CAP GROWTH FUND

OBJECTIVE
The Fund seeks long-term capital growth. There can be no assurance that the Fund
will achieve this objective.

STRATEGY
The Fund invests primarily in equity securities of medium capitalization (mid
cap) U.S. companies. The Fund focuses on companies with total market
capitalization within the range of total market capitalizations of the companies
included in the Russell Mid-Cap Growth Index. This would correspond to companies
with total market capitalizations between [ ] and [ ] as of [date].

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The Fund may sell securities for a variety of reasons, such as to secure gains,
limit losses, or redeploy assets into more promising opportunities.

RISKS
Investors could lose money on their investments in the Fund, or the Fund could
underperform other possible investments, if any of the following occurs:

- The U.S. or foreign stock markets go down.

- Mid cap stocks fall out of favor with the market.

- The markets favor stocks with "value" characteristics over growth
stocks.

- An adverse event, such as an unfavorable earnings report, depresses
the value of a particular company's stock.

- The investment adviser's judgment about the attractiveness, value or
potential appreciation of a particular company's stock proves to be
incorrect.

SMALLER COMPANY RISKS. The Fund is subject to additional risk because of its
focus on mid cap stocks. Smaller companies may have limited product lines,
markets and financial resources. They may have shorter operating histories and
more volatile businesses. The prices of smaller company stocks, and in
particular aggressive growth stocks, tend to be more volatile than the prices of
stocks of companies with larger market capitalizations. In addition, it may be
harder to sell these stocks, which can reduce their selling prices.

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WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

- are seeking capital growth over the long term (at least five years)
and are willing to ride out market swings;

- are looking to allocate a portion of your assets to stocks with
above-average volatility;

- are comfortable with the risks of the stock market;

- are not seeking a substantial amount of current income.

LMI SMALL CAP TAX-SENSITIVE FUND

OBJECTIVE
The Fund seeks long-term capital growth, while minimizing taxable distributions
to shareholders.

The Fund may sell securities for a variety of reasons, such as to secure gains,
limit losses, or redeploy assets into more promising opportunities.

TAX MANAGEMENT STRATEGY. The Fund uses the following strategies, to the extent
consistent with its investment goals, to reduce the impact of federal and state
income taxes on the Fund's after-tax returns.

- Minimizing sales of securities that result in capital gains.

- If such a sale cannot be avoided, selling first the highest cost
securities to reduce the amount of capital gain. Also, preferring the
sale of securities producing long-term gains to those producing
short-term gains.

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<PAGE> 8

- Selling securities to realize capital losses that can be offset
against realized capital gains.

- Favoring lower dividend stocks and limiting income-producing
investments.

RISKS
Investors could lose money on their investments in the Fund, or the Fund could
underperform other possible investments, if any of the following occurs:

- The U.S. or foreign stock markets go down.

- Small cap stocks fall out of favor with the market.

- The markets favor stocks with "value" characteristics over growth
stocks.

- An adverse event, such as an unfavorable earnings report, depresses
the value of a particular company's stock.

- The investment adviser's judgment about the attractiveness, value or
potential appreciation of a particular company's stock proves to be
incorrect.

- The investment adviser's attempts to manage the Fund in a
tax-efficient manner are not successful, require trade-offs that
reduce pre-tax returns or result in the Fund retaining ownership of
securities longer than it otherwise might.

WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

- are seeking capital growth over the long term (at least five years)
and are willing to ride out market swings;

- are looking to allocate a portion of your assets to stocks with
above-average volatility;

- are comfortable with the risks of the stock market;

- are not seeking a substantial amount of current income;

- are a relatively high-income investor seeking tax-advantaged total
returns.

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LMI TECHNOLOGY FUND

OBJECTIVE
The Fund seeks long-term capital growth. There can be no assurance that the Fund
will achieve this objective.

STRATEGY
The Fund invests primarily in the securities of technology companies.

Technology companies include those companies expected to benefit from the
development, advancement, and use of science and technology. Some of the market
sectors likely to be included in the portfolio are:

- computers, including products, software, and electronic components;

- telecommunications;

- media and information services;

- environmental services;

- chemicals and synthetic materials;

- health care, including medical devices, pharmaceuticals, and
biotechnology;

- defense and aerospace; and

- internet products and services.

The Fund's holdings can range from large, "blue chip" companies with established
track records to small companies developing new technologies, including
companies making initial public offerings.

The Fund may sell securities for a variety of reasons, such as to secure gains,
limit losses, or redeploy assets into more promising opportunities.

As a technology fund, the Fund concentrates its investments (in other words,
invests 25% or more of its total assets) in the stocks of technology companies.

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While most assets will be invested in U.S. common stocks, the Fund may invest up
to 25% of its total assets in foreign securities (measured at the time of
investment). The Fund also may invest in other securities, including other
investment companies and futures and options, in keeping with the Fund's
investment objectives.

RISKS
Investors could lose money on their investments in the Fund, or the Fund could
underperform other possible investments, if any of the following occurs:

- The U.S. or foreign stock markets go down.

- Stocks of technology companies fall out of favor with the market.

- The markets favor stocks with "value" characteristics over growth
stocks.

- An adverse event, such as an unfavorable earnings report, depresses
the value of a particular company's stock.

- The investment adviser's judgment about the attractiveness, value or
potential appreciation of a particular company's stock proves to be
incorrect.

INVESTMENT FOCUS RISKS. The Fund's policy of investing primarily in technology
companies makes it more susceptible to factors adversely affecting companies in
that sector.

The technology sector can be affected by specific risks including: aggressive
product pricing due to competition pressure from numerous market entrants, short
product cycles and product obsolescence, among others. Companies in the rapidly
changing fields of science and technology often face high price volatility.
Products and services that at first appear promising may not prove commercially
successful or may become obsolete quickly. This level of risk will increase to
the extent the Fund has significant exposure to smaller or unseasoned companies,
which may not have established products or more experienced management.
Increased volatility also is associated with investments in this segment of the
stock market (as opposed to investments in a broader range of industries). The
performance and volatility of the Fund will likely reflect that of this sector
during down markets as well as during up markets.

In addition, the Fund is "non-diversified," which means it may invest more than
5% of its assets in the stock of a single company. To the extent the Fund
invests a greater percentage of its assets in a single company, the Fund has
greater exposure to the performance and risks of that company.

SMALLER COMPANY RISKS. The Fund is subject to additional risk because of its
investment in the stocks of smaller companies. Smaller companies may have
limited product lines, markets and financial resources. They may have shorter
operating histories and more volatile businesses. The prices of smaller company
stocks, and in particular aggressive growth stocks, tend to be more volatile
than the prices of stocks of companies with larger market capitalizations. In
addition, it may be harder to sell these stocks, which can reduce their selling
prices.

-9-
<PAGE> 11

WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

- are seeking capital growth over the long term (at least five years)
and are willing to ride out market swings;

- are looking to allocate a portion of your assets to stocks with
above-average volatility;

- are comfortable with the risks of the stock market;

- are not seeking a substantial amount of current income;

- want exposure to the technology sector and can accept the heightened
risk and volatility associated with stocks of technology companies as
compared to a fund investing across multiple sectors and industries.

LMI INTERNET FUND

OBJECTIVE
The Fund seeks long-term capital growth. There can be no assurance that the Fund
will achieve this objective.

STRATEGY
The Fund invests primarily in the securities of internet companies.

The internet is a collection of connected computers that allows commercial and
professional organizations, educational institutions, government agencies and
consumers to communicate electronically, access and share information and
conduct business around the world. An intranet uses the same technology for
communication within an organization or other group of authorized users.

Internet companies include those companies engaged in development,
manufacturing, research or design of products and services facilitating the use
of the internet or intranets, or engaged to a significant extent in the business
of distributing products, processes or services via the internet. Some of the
market sectors likely to be included in the portfolio are:

- speed/bandwidth-- companies that enhance the performance of the
internet through hardware, such as telecommunication, switch and
router companies;

- software -- companies that develop tools to access the internet or use
it more efficiently;

- search engines and portals -- online search services and gateways;

- access providers -- companies that provide internet access to
computers and wireless devices;

- media and information services -- content providers and communities,
internet-oriented marketing companies;

- e-commerce -- companies that provide products or services via the
internet;

- internet enablers -- web site hosting, e-mail management, transaction
services;

- security services -- companies that provide e-commerce security
software and provide outsourced services;

- consultants -- web site designers, internet strategists.

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The Fund's holdings can range from large, "blue chip" companies with established
track records to small companies developing new technologies, including
companies making initial public offerings.

The Fund may sell securities for a variety of reasons, such as to secure gains,
limit losses, or redeploy assets into more promising opportunities.

As an internet fund, the Fund concentrates its investments (in other words,
invests 25% or more of its total assets) in the stocks of internet companies.

RISKS
Investors could lose money on their investments in the Fund, or the Fund could
underperform other possible investments, if any of the following occurs:

- The U.S. or foreign stock markets go down.

- Stocks of internet companies fall out of favor with the market.

- The markets favor stocks with "value" characteristics over growth
stocks.

- An adverse event, such as an unfavorable earnings report, depresses
the value of a particular company's stock.

- The investment adviser's judgment about the attractiveness, value or
potential appreciation of a particular company's stock proves to be
incorrect.

INVESTMENT FOCUS RISKS. The Fund's policy of investing primarily in internet
companies makes it more susceptible to factors adversely affecting companies in
that sector.

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Internet and internet-related businesses can be affected by specific risks
including: aggressive product pricing due to competition pressure from numerous
market entrants, short product cycles and product obsolescence, among others.
Companies in the rapidly changing fields of science and technology often face
high price volatility. Products and services that at first appear promising may
not prove commercially successful or may become obsolete quickly. This level of
risk will increase to the extent the Fund has significant exposure to smaller or
unseasoned companies, which may not have established products or more
experienced management. Increased volatility also is associated with investments
in this segment of the stock market (as opposed to investments in a broader
range of industries). The performance and volatility of the Fund will likely
reflect that of this sector during down markets as well as during up markets.

WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

- are seeking capital growth over the long term (at least five years)
and are willing to ride out market swings;

- are looking to allocate a portion of your assets to stocks with
above-average volatility;

- re comfortable with the risks of the stock market;

- re not seeking a substantial amount of current income;

- ant exposure to the internet sector and can accept the heightened risk
and volatility associated with stocks of internet companies as
compared to a fund investing across multiple sectors and industries.

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<PAGE> 14

PAST FUND PERFORMANCE
As new funds, the Funds do not have performance history as of the date of this
prospectus.

EXPENSE INFORMATION
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.

SHAREHOLDER TRANSACTION FEES (fees paid directly from your investment)

A SHARES B SHARES

Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price) 5.5%(a) None

Maximum Deferred Sales Charge (Load)
Imposed on Purchases (as a percentage of
the lesser of purchase price or redemption proceeds) None(b) 5%(c)

Redemption Fee (as a percentage of
the amount redeemed) 0.75%(d) None

a The sales charge declines as the amount invested increases.

b A contingent deferred sales charge (CDSC) is a one-time fee charged at
the time of redemption. A 1% CDSC applies to redemptions of A Shares
within one year of investment that were purchased with no initial sales
charge as part of an investment of $1,000,000 or more.

c The CDSC payable upon redemption of B Shares declines over time.

d You may be assessed a redemption fee (payable to the Fund) of up to the
amount specified if you redeem Fund shares within 180 days after
investing.

ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

----------------------------------------------------------------------------------------------------------------------------------
LMI Small Cap LMI Mid Cap LMI Small Cap
Growth Fund Growth Fund Tax-Sensitive Fund LMI Technology Fund LMI Internet Fund
----------------------------------------------------------------------------------------------------------------------------------
A Shares B Shares A Shares B Shares A Shares B Shares A Shares B Shares A Shares B Shares
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
----------------------------------------------------------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees 0.25% 1.00% 0.25% 1.00% 0.25% 1.00% 0.25% 1.00% 0.25% 1.00%
----------------------------------------------------------------------------------------------------------------------------------
Other Expenses(1) X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX%
----------------------------------------------------------------------------------------------------------------------------------
Total Operating
Expenses X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX%
----------------------------------------------------------------------------------------------------------------------------------
Fee Waiver and
Expense
Reimbursement(2) X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX% X.XX%
----------------------------------------------------------------------------------------------------------------------------------
Net Expenses(2) 1.75% 2.50% 1.75% 2.50% 1.75% 2.50% 1.75% 2.50% 1.75% 2.50%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

1 Other Expenses are based on annualized estimated amounts for the current
fiscal year.

2 Reflects the impact of a contractual undertaking by the investment adviser
to reduce each Fund's expenses (by paying certain expenses and/or waiving
fees) so that the Fund's total operating expenses for the first 12

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months of its operations will not exceed 1.75% for A Shares and 2.50% for B
Shares. Thereafter, any such expense reductions will be voluntary and may
be reduced or eliminated at any time upon notifying investors.

EXAMPLE
This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then, except as shown for B Shares, redeem all of your shares at
the end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs* would be:

1 YEAR 3 YEARS

LMI Small Cap Fund
A Shares $XX $XX
B Shares* $XX $XX
B Shares** $XX $XX
LMI Mid Cap Fund
A Shares $XX $XX
B Shares* $XX $XX
B Shares** $XX $XX
LMI Small Cap Tax-Sensitive Fund
A Shares $XX $XX
B Shares* $XX $XX
B Shares** $XX $XX
LMI Technology Fund
A Shares $XX $XX
B Shares* $XX $XX
B Shares** $XX $XX
LMI Internet Fund
A Shares $XX $XX
B Shares* $XX $XX
B Shares** $XX $XX

* Assumes you sold your shares at the end of the time period.

** Assumes you stayed in the Fund.

MAIN RISKS

The value of your investment in a Fund changes with the values of that Fund's
investments. Many factors can affect those values. The Funds' main risks are
identified in ABOUT THE FUNDS and further described below.

The main risks that could adversely affect the value of the Fund's shares and
the total return on your investment include:

MARKET RISK. Market risk is the risk that the market value of a Fund's
investments will fluctuate as the stock markets fluctuate. Market risk may
affect a particular industry or segment of the

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<PAGE> 16

economy or it may affect the market as a whole. The market value of a stock is
based largely upon the market's perception of the issuing company's value.

The total return of each Fund will fluctuate within a wide range, like stock
prices generally, so you could lose money over short or even long periods. Stock
markets can move in cycles, with periods of rising prices and periods of falling
prices.

MANAGEMENT RISK. Management risk is the risk that an investment adviser's
decisions will not produce the desired result. The investment adviser's
assessment of companies held in a Fund's portfolio may prove incorrect,
resulting in losses or poor performance even in a rising market.

GROWTH STOCK RISK. The Fund's strategy of investing in "growth" stocks could
fall out of favor with the investing public, resulting in lagging performance
versus other types of stock funds. In addition, growth stocks can be volatile
for several reasons. Because they usually reinvest a high proportion of their
earnings in their own businesses, they may lack the dividend income of other
types of stocks that could cushion their decline in a falling market. Also,
because investors buy growth stocks because of their expected superior earnings
growth, earnings disappointments often result in sharp price declines.

IPO RISK. Securities issued through an initial public offering (an "IPO") can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The number of securities issued in an IPO
is also limited, so it is likely that IPO securities will represent a smaller
component of a Fund's portfolio as the Fund's assets increase (and thus have a
more limited effect on the Fund's performance). Investments in initial public
offerings may result in increased transaction costs and expenses and the
realization of short-term capital gains and distributions.

FOREIGN RISK. Foreign investments involve certain special risks. For example,
their values may decline in response to changes in currency exchange rates,
unfavorable political and legal developments, unreliable or untimely
information, and economic and financial instability. In addition, the liquidity
of these investments may be more limited than for U.S. investments, which means
that a Fund may at times be unable to sell them at desirable prices. Foreign
settlement procedures also may involve additional risks. These risks are
generally greater in the case of developing (also known as emerging) markets
with less developed legal and financial systems.

Certain of these risks also may apply to U.S. investments that are denominated
in foreign currencies or that are traded in foreign markets, or to securities of
U.S. companies that have significant foreign operations.

SHORT-TERM TRADING. Each Fund (except for LMI Small Cap Tax-Sensitive Fund) may
engage in short-term trading, including trading in IPOs. The frequency of
portfolio transactions of each Fund (the portfolio turnover rate) will vary from
year to year depending on many factors. A higher rate of portfolio turnover
could produce increased trading costs and taxable distributions, which could
detract from a Fund's performance.

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<PAGE> 17

ALTERNATIVE STRATEGIES. At times the investment adviser may determine that
market conditions make pursuing a Fund's usual investment strategies
inconsistent with the best interests of the Fund's shareholders. In this event,
the Fund temporarily may use alternative strategies that are mainly designed to
limit losses. However, the Fund may choose not to use these strategies for a
variety of reasons, even in very volatile market conditions. These strategies
may cause the Fund to miss out on investment opportunities, and may prevent the
Fund from achieving its objective.

POLICY CHANGES. The Funds' Board of Trustees may change a Fund's objective,
investment approach and other policies without shareholder approval, except as
otherwise indicated.

OTHER INVESTMENTS. In addition to the main investment strategies described
above, each Fund may make other investments, such as investments in preferred
stocks, convertible securities, debt securities and derivatives, which may be
subject to other risks, as described in the Fund's Statement of Additional
Information (SAI).

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HOW TO BUY AND SELL SHARES

HOW TO BUY SHARES

SELECTING SHARES. Each Fund offers A Shares and B Shares. This allows you to
choose between different types of sales charges and different levels of ongoing
operating expenses, as illustrated in ABOUT THE FUNDS -- FEES AND EXPENSES. The
class of shares that is best for you depends on a number of factors, including
the amount you plan to invest and how long you plan to hold the shares. Here is
a summary of the differences between the classes of shares:

A SHARES

- Front end sales charge. There are several ways to reduce these sales
charges.

- Lower annual expenses than B Shares.

B SHARES

- No front end sales charge. All your money goes to work for you right
away.

- Higher annual expenses than A Shares.

- A contingent deferred sales charge (CDSC) on shares you sell within
six years of purchase.

- Automatic conversion to A Shares approximately eight years after
issuance, thus reducing future annual expenses.

- CDSC is waived for certain redemptions.

PURCHASE PRICE OF SHARES. A Shares of each Fund are sold at the net asset value
per share (NAV) next determined after the Fund receives a purchase order in
proper form plus any applicable sales charge.

B Shares of each Fund are sold at the NAV next determined after the Fund
receives a purchase order in proper form.

INVESTMENT MINIMUMS. There is a $1,000 minimum for initial purchases and a $250
minimum for subsequent purchases of shares of a Fund. Each Fund may waive these
minimums in its discretion. Initial investment minimums do not apply to
investments made through a periodic investment program for investors who make a
monthly investment of $250 or more.

Purchases over $250,000 must be for A Shares.

TIMING OF ORDERS. Purchase orders must be received by each Fund's transfer agent
or an authorized financial intermediary before the close of regular session
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time).
Purchase orders received after that time will be accepted as of the next
business day.

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<PAGE> 19

METHODS FOR PURCHASING SHARES. Investors may purchase shares:

THROUGH A FINANCIAL INTERMEDIARY. A financial intermediary authorized by
the distributor can sell you shares of each Fund. Financial intermediaries
include banks, broker-dealers, insurance companies and investment advisers.
Please note that financial intermediaries may charge you transaction-based
or other fees for their services. See ADDITIONAL POLICIES FOR PURCHASES AND
REDEMPTIONS -- INVESTING THROUGH FINANCIAL INTERMEDIARIES.

BY MAIL. You may open an account by completing, signing and mailing the
attached account application form and a check or other negotiable bank
draft (payable to LMI Funds) for $1,000 or more to the address below. Be
sure to specify on your account application form the Fund and share class
being purchased. If the class is not specified, your purchase will
automatically be invested in A Shares. For additional investments, send a
letter stating the name of each Fund and the amount you would like to
invest in each Fund (which must be at least $250 per Fund), your name and
your account number with a check for the appropriate amount to the address
below.

REGULAR MAIL: OVERNIGHT MAIL:
LMI Funds LMI Funds
[address] [address]

BY WIRE. To open a new account, you should call the Funds at 1-800-xxx-xxxx
to obtain an account number and complete wire instructions prior to wiring
any money. Within seven days of purchase, you must send a completed account
application form containing your certified taxpayer identification number
to the transfer agent at LMI Funds, [address]. Wire instructions must state
the Fund's name, share class, your registered name and your account number.
Your bank wire should be sent through the Federal Reserve Bank Wire System
to:

[name]
[address]
ABA# xxxxxxxxx
DDA# xx-xxx-x
Account No.:

You may make additional investments at any time using the wire instructions
described above. Note that banks may charge fees for transmitting wires.

THROUGH AUTOMATIC INVESTMENT. Under the Automatic Investment Plan (AIP) you
may arrange for periodic investments in one or more Funds through automatic
deductions from a checking or savings account. To enroll in the AIP you
should complete the AIP application form or call the Funds at
1-800-xxx-xxxx. The minimum pre-authorized investment amount per Fund is
$250. You may discontinue the AIP at any time. We may discontinue the AIP
on 30 days' written notice to you.

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<PAGE> 20

HOW TO REDEEM (SELL) SHARES

REDEMPTION PRICE. We will redeem shares at the NAV next determined after we
receive the redemption request in proper form. We will reduce the amount you
receive by the amount of any applicable CDSC or redemption fee.

Please see SALES CHARGES AND RELATED PROGRAMS below for information about CDSCs
and redemption fees.

METHODS FOR REDEEMING SHARES. You may redeem shares of the Funds in several
ways:

THROUGH A FINANCIAL INTERMEDIARY. Your financial intermediary will be
responsible for furnishing information to the Funds in proper form and may
charge for these services. See ADDITIONAL POLICIES FOR PURCHASES AND
REDEMPTIONS -- INVESTING THROUGH FINANCIAL INTERMEDIARIES.

BY MAIL. You may mail your redemption request to: LMI Funds, [address].
(For overnight mail, use the address under METHODS FOR REDEEMING SHARES.)
The redemption request should state the name of the Fund or Funds, share
class, account number, amount of redemption, account name and where to send
the proceeds. All account owners must sign.

BY TELEPHONE. You can redeem your shares by contacting your financial
intermediary or calling the Funds at 1-800-xxx-xxxx. There is no minimum
requirement for telephone redemptions paid by check.

If you are redeeming shares worth at least $1,000 and you have authorized
expedited redemption on your account application form, simply call the
Funds prior to 4:00 p.m. (Eastern time), and request the redemption
proceeds be mailed to the commercial bank or registered broker-dealer you
designated on your account application form. We will send your redemption
amount to you on the next business day. We reserve the right at any time to
change this redemption procedure or impose fees for this service.

During periods of unusual economic or market activity, you may experience
difficulties or delays in effecting telephone redemptions. In such cases
you should consider placing your redemption request by mail.

THROUGH AUTOMATIC WITHDRAWAL. If you have an account value of $2,500 or
more in a Funds, you may redeem shares of the Fund on a monthly, quarterly,
semi-annual or annual basis through the Automatic Withdrawal Plan (AWP).
The minimum withdrawal is $50. We usually process withdrawals on the 20th
day of the month and promptly send you your redemption amount. You may
enroll in the AWP by completing the AWP application form available through
the transfer agent. To participate in the AWP, you must have your dividends
automatically reinvested. You may change or cancel the AWP at any time upon
notice to the transfer agent. You should not buy A Shares (and pay a sales
charge) while you participate in the AWP and you must pay any applicable
CDSC when you redeem shares.

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<PAGE> 21

ADDITIONAL POLICIES FOR PURCHASES AND REDEMPTIONS

SIGNATURE GUARANTEES. For your protection, a signature guarantee is required for
the following redemption requests: (a) redemption proceeds greater than $50,000;
(b) redemption proceeds that are payable to someone other than the recordowner
of the account; or (c) redemption proceeds being mailed to the address of record
on the account. You can obtain a signature guarantee from a financial
institution such as a commercial bank, trust company, savings association or
from a securities firm having membership on a recognized securities exchange.

REINVESTMENT PRIVILEGE. For 60 days after you sell shares of a Fund, you may
reinvest your redemption proceeds in shares of the same class of the Fund at the
then-current NAV. Any CDSC you paid on the amount you are reinvesting will be
credited to your account. You may use this privilege once in any given
twelve-month period with respect to your shares of a Fund. You or your financial
intermediary must notify the transfer agent in writing at the time of
reinvestment in order to eliminate the sales charge on your reinvestment.

TELEPHONE TRANSACTIONS. Shareholders automatically have the privilege of
redeeming shares of the Funds by telephone. The Funds will employ reasonable
procedures to verify the genuineness of telephone redemption requests, which may
include recording telephone calls and requiring certain personal identification
information. If reasonable procedures are not followed, the Funds may be liable
for any losses due to unauthorized or fraudulent instructions. Neither the Funds
nor the Funds' distributor or transfer agent will be liable for following
instructions communicated by telephone that are reasonably believed to be
genuine. You should verify the accuracy of your account statements immediately
after you receive them and contact the Funds if you question any activity in the
account.

INVESTING THROUGH FINANCIAL INTERMEDIARIES. Investors who purchase shares
through a financial intermediary will be subject to the procedures of their
financial intermediary, which may include charges, limitations, investment
minimums, cutoff times and restrictions in addition to, or different from, those
generally applicable to Fund shareholders. Any such charges would reduce the
return on an investment in a Fund. Investors should acquaint themselves with
their financial intermediary's procedures and should read this prospectus in
conjunction with any material and information provided by their financial
intermediary. Investors who purchase a Fund's shares though a financial
intermediary may or may not be the shareholder of record. Financial
intermediaries are responsible for promptly transmitting purchase, redemption
and other requests to a Fund.

Certain shareholder services, such as periodic investment programs, may not be
available to customers of financial intermediaries or may differ in scope from
programs generally available to Fund shareholders. Shareholders should contact
their financial intermediary for further information. The Funds may confirm
purchases and redemptions of a financial intermediary's customers directly to
the intermediary, which in turn should provide its customers with confirmation
and periodic statements. The Funds are not responsible for the failure of any
financial intermediary to carry out its obligations to its customer.

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<PAGE> 22

In certain cases, the Funds may authorize intermediaries to accept orders on a
Fund's behalf up to the time at which the NAV is determined. If those orders are
transmitted to the Fund and paid for in accordance with established procedures,
they will be priced at the NAV next determined after the request is received in
the form required by the intermediary on the Fund's behalf.

OTHER POLICIES. In addition --

- We consider orders to be in "proper form" when all required documents
are properly completed, signed and received.

- Each Fund reserves the right to reject any purchase order.

- At any time, a Fund may change any of its purchase or redemption
procedures, and may suspend the sale of its shares.

- Each Fund may delay sending redemption proceeds for up to seven days,
or longer if permitted by the Securities and Exchange Commission.

- We will typically send redemption amounts to you within seven days
after you redeem shares. We may hold redemption amounts from the sale
of shares you purchased by check until the purchase check has cleared,
which may be as long as 15 days.

- To limit the Funds' expenses, we do not currently issue share
certificates.

- Each Fund may temporarily stop redeeming shares if:

- the New York Stock Exchange is closed;
- trading on the New York Stock Exchange is restricted;
- an emergency exists and a Fund cannot sell its assets or
accurately determine the value of its assets; or
- the Securities and Exchange Commission orders a Fund to suspend
redemptions.

- Each Fund reserves the right to make payment for redeemed shares
wholly or in part by giving the redeeming shareholder portfolio
securities. The shareholder will pay transaction costs to dispose of
these securities.

- We may redeem your account if its value falls below $1,000 as a result
of redemptions (but not as a result of a decline in NAV). You will be
notified in writing and allowed 60 days to increase the value of your
account to the minimum investment level.

SALES CHARGES AND RELATED PROGRAMS

A SHARES
You can purchase A Shares at the NAV plus an initial sales charge. The sales
charge as a percentage of your investment decreases as the amount you invest
increases. The current sales charge and commissions paid to selected dealers are
as follows:

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<PAGE> 23

SALES CHARGE AS A
PERCENTAGE OF DEALER
----------------------- REALLOWANCE
NET AS A
YOUR ASSET PERCENTAGE OF
AMOUNT OF PURCHASE INVESTMENT VALUE OFFERING PRICE
Less than $25,000 5.50% 5.82% 5.00%
$25,000 to $49,999 5.25% 5.54% 4.75%
50,000 to $99,999 4.50% 4.71% 4.00%
$100,000 to $249,999 3.50% 3.63% 3.25%
$250,000 to $499,999 2.50% 2.56% 2.25%
$500,000 to $999,999 1.50% 1.52% 1.25%
$1,000,000 or more None* None* (see below)**

* No initial sales charge applies on investments of $1 million or more.
However, a CDSC of 1% is imposed on certain redemptions within one year of
purchase.

** The distributor will pay a 1% commission to dealers who initiate and are
responsible for purchases of $1 million or more.

The distributor may pay the entire commission to dealers. If that occurs, the
dealer may be considered an "underwriter" under federal securities law.

SALES CHARGE REDUCTIONS
Sales charges on A Shares may be reduced or eliminated in the following
circumstances. For further information on sales charge reductions, call the
Funds at 1-800-xxx-xxxx.

LETTER OF INTENT. If you intend to purchase at least $25,000 of A Shares of the
Funds, you may wish to complete the Letter of Intent section of your account
application form. By doing so, you agree to invest a certain amount over a
13-month period. You would pay a sales charge on any A Shares you purchase
during the 13 months based on the total amount to be invested under the Letter
of Intent. You can apply any investments you made in A Shares during the
preceding 90-day period toward fulfillment of the Letter of Intent (although
there will be no refund of sales charges you paid during the 90-day period). You
should inform the Funds' transfer agent that you have a Letter of Intent each
time you make an investment.

You are not obligated to purchase the amount specified in the Letter of Intent.
If you purchase less than the amount specified, however, you must pay the
difference between the sales charge paid and the sales charge applicable to the
purchases actually made. Your shares will be held subject to a pledge for this
purpose. The custodian will release the pledge at the end of the 13 months
unless you do not complete your intended investment.

QUANTITY DISCOUNTS. You may combine purchases of A Shares that are made by you,
your spouse, your children under age 21 and your IRA when calculating the sales
charge. You must notify your financial intermediary or the Funds' transfer agent
to qualify.

RIGHT OF ACCUMULATION. You may add the value of any A Shares of the Funds you
already own to the amount of your next investment for purposes of calculating
the sales charge at the time of the current purchase. You must notify your
financial intermediary or the transfer agent to qualify. Certain financial
intermediaries may not offer these programs or may impose conditions

-22-
<PAGE> 24

or fees to use these programs. You should consult with your financial
intermediary prior to purchasing the Funds' shares.

OTHER CIRCUMSTANCES. We may waive some or all of the initial sales charge on A
Shares for the following types of purchasers:

1. individuals with an investment account or relationship with the investment
adviser;

2. full-time employees and retired employees of the investment adviser or its
affiliates, employees of the Funds' service providers and immediate family
members of such persons;

3. registered broker-dealers that have entered into selling agreements with the
distributor, for their own accounts or for retirement plans for their employees
or sold to registered representatives for full-time employees (and their
families) that certify to the distributor at the time of purchase that such
purchase is for their own account (or for the benefit of their families);

4. individuals who reinvest a distribution from a qualified retirement plan for
which the investment adviser serves as investment adviser;

5. banks and other financial intermediaries that have entered into agreements
with a Fund to provide shareholder services for customers (including customers
of such banks and other financial intermediaries, and the immediate family
members of such customers); and

6. fee-based financial planners or employee benefit plan consultants acting for
the accounts of their clients.

REDEMPTION FEE AND CDSC. You will be assessed a redemption fee of up to 0.75%
(expressed as a percentage of the amount you are redeeming) if you redeem a
Fund's shares within 180 days after investing. This fee is intended to encourage
long-term investment in the Fund, to avoid transaction and other expenses caused
by early redemptions and to facilitate portfolio management. The fee, which is
paid to the Fund, is not a deferred sales charge, and is not a commission paid
to the investment adviser or its affiliates.

You pay a CDSC when you redeem A Shares that were bought as part of an
investment of at least $1 million within one year of buying them. The CDSC is
based on the original net asset value at the time of your investment or the net
asset value at the time of redemption, whichever is lower. You will not pay a
CDSC to the extent that the value of the redeemed shares represents (2)
reinvestment of dividends or capital gains distributions; or (2) capital
appreciation of shares redeemed. When you redeem shares, we will assume that you
are redeeming first shares representing reinvestment of dividends and capital
gains distributions, then any appreciation on shares redeemed, and then
remaining shares held by you for the longest period of time.

We will waive the CDSC on A Shares to the same extent as described under B
SHARES below.

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<PAGE> 25

B SHARES

CDSC. You pay a CDSC when you redeem B Shares within six years of buying them.

The CDSC schedule for B Shares is set forth below. The CDSC is based on the
original net asset value at the time of your investment or the net asset value
at the time of redemption, whichever is lower.

CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT
YEARS SINCE PURCHASE SUBJECT TO CHARGE
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter 0.00%

At the time of purchase of B Shares of the Funds, the distributor pays sales
commissions of 4.00% of the purchase price to appropriate financial
intermediaries that initiate and are responsible for purchases of such shares.

You will not pay a CDSC to the extent that the value of the redeemed shares
represents (1) reinvestment of dividends or capital gains distributions; or (2)
capital appreciation of shares redeemed. When you redeem shares, we will assume
that you are redeeming first shares representing reinvestment of dividends and
capital gains distributions, and then remaining shares held by you for the
longest period of time.

We will waive the CDSC payable upon redemption of shares of the Funds for:

- redemptions made within one year after the death of a shareholder or
registered joint owner;

- minimum required distributions made from an IRA or other retirement
plan account after you reach age 70;

- involuntary redemptions made by the Funds.

CONVERSION TO A SHARES. After eight years from the end of the calendar month in
which the shareholder's purchase order for B shares was accepted, the B Shares
will automatically convert to A Shares of that Fund. The conversion will be on
the basis of the relative net asset values of the shares, without the imposition
of any sales load, fee or other charge. For purposes of conversion, B Shares of
a Fund purchased by a shareholder through the reinvestment of dividends and
distributions will be considered to be held in a separate sub-account. Each time
any B Shares in the shareholder's account (other than those in the sub-account)
convert, a corresponding pro rata portion of those shares in the sub-account
will also convert.

-24-
<PAGE> 26

RULE 12b-1 FEES
Each Fund has adopted Rule 12b-1 plans with respect to its A Shares and B Shares
that allow the Funds to pay distribution and other fees for the sale of its
shares and for services provided to shareholders. Under the plans, the Funds may
pay an annual fee of up to 0.25% of the average daily net assets of A Shares and
B Shares to pay for certain shareholder services provided by financial
intermediaries that have agreements with the Funds or the Funds' distributor to
provide such services. The Funds also may pay an annual fee of up to 0.75% of
the average daily net assets of the B Shares to finance activities relating to
the distribution of its shares.

Because the fees are paid out of the Funds' assets on an on-going basis, over
time these fees will increase the cost of an investment in the Funds and may
cost a shareholder more than paying other types of sales charges.

In addition to Rule 12b-1-related payments, the investment adviser may, from
time to time, make payments to banks, broker-dealers or other financial
intermediaries for certain services to the Funds and/or its shareholders,
including sub-administration, sub-transfer agency and shareholder servicing. The
investment adviser or distributor may make such payments out of its own
resources, without additional cost to the Funds or its shareholders.

SHAREHOLDER INFORMATION

PRICING YOUR SHARES
Each Fund's NAV is calculated on each day the New York Stock Exchange is open.
The NAV is the value of a single share of the Fund. Each Fund calculates its NAV
separately for each class. The NAV is calculated by (1) taking the current value
of the Fund's total assets allocated to a particular class of shares, (2)
subtracting the liabilities and expenses charged to that class, and (3) dividing
that amount by the total number of shares of that class outstanding.

Each Fund calculates its NAV as of the close of regular session trading on the
New York Stock Exchange, normally 4:00 p.m. (Eastern time). If the New York
Stock Exchange closes early, the Fund will accelerate its calculation of NAV and
transaction deadlines to that time.

The NAV of each Fund is generally based on the market value of the securities
held in the Fund. If market values are not available, the fair value of
securities as determined in good faith by, or using procedures approved by, the
Board of Trustees of the Fund.

DIVIDENDS
It is currently contemplated that dividends of each Fund's net investment
income, if any, will be declared and paid annually. In the event that a Fund's
Board of Trustees changes the dividend policy, shareholders will be notified.
Net capital gain, if any, realized by a Fund will be distributed at least
annually. Unless a shareholder elects payment in cash, all dividend and capital
gain distributions of a Fund are automatically reinvested in additional full and
fractional shares of the Fund at the NAV as of the payment date of the
distribution.

-25-
<PAGE> 27

BUYING A DIVIDEND. If you purchase shares shortly before a distribution, you
will be taxed on the distribution, even though it represents a return of your
investment. To avoid this result, check each Fund's distribution schedule before
you invest.

TAXES
Dividends derived from each Fund's net investment income and short-term capital
gains are generally taxable to a shareholder as ordinary income, even when
reinvested in additional Fund shares. Due to the nature of its investments, a
Fund's distributions will consist primarily of ordinary income. Distributions of
net capital gain, if any, realized by a Fund are taxable to shareholders of a
Fund as a long-term capital gain (taxable, in the case of an individual
shareholder, at the maximum rate of 20%), regardless of the length of time the
shareholder may have held shares in a Fund at the time of distribution.

Required tax information will be provided annually. You are encouraged to retain
copies of your account statements or year-end statements for tax reporting
purposes. However, if you have incomplete records, you may obtain historical
account transaction information at a reasonable fee.

You should consult your tax adviser regarding specific questions as to federal,
state and local taxes.

MANAGEMENT

INVESTMENT ADVISER
Lee Munder Investments, Ltd., 231 Royal Palm Way, Palm Beach FL 33480, is the
Funds' investment adviser. The investment adviser oversees the Funds' program,
places orders for the Fund's purchases and sales of portfolio securities and
maintains records relating to such purchases and sales.

The investment adviser was organized in January 2000 and is an investment
adviser registered with the SEC. In addition to the Funds, the investment
adviser provides investment advisory services to private accounts and, as of
June 30, 2000, had approximately $100 million under management. Lee P. Munder is
Chairman of the investment adviser. Mr. Munder formerly was the founder and
chief executive officer of Munder Capital Management.

For its services, the investment adviser receives an annual fee of 1.00% of each
Fund's average daily net assets. The investment adviser has contractually agreed
to reduce Fund expenses (by paying certain expenses and/or waiving fees) so that
each Fund's total operating expenses for the first 12 months of its operations
will not exceed 1.75% for A Shares and 2.50% for B Shares. Thereafter, any such
expense reductions will be voluntary and may be reduced or eliminated at any
time upon notifying investors.

PORTFOLIO MANAGEMENT. The full advisory staff of the investment adviser
contributes to the investment management services provided to the Funds. The
following persons, however, are primarily responsible for the day-to-day
investment management of the Funds:

-26-
<PAGE> 28

LMI SMALL CAP GROWTH FUND-- Nicholas S. Battelle and Andrew Beja. Mr.
Battelle, [title], joined the investment adviser in August 2000. Before
joining the investment adviser, Mr. Battelle had served as vice president
and director of Standish, Ayer & Wood, Inc. since [ ]. Mr. Beja, [title],
joined the investment adviser in August 2000. Before joining the investment
adviser, Mr. Beja had served as vice president and senior analyst of
Standish, Ayer & Wood, Inc. since March 1996 and as an associate director
since 1999. Previously, Mr. Beja was a vice president and analyst at
Advest, Inc.

LMI MID CAP GROWTH FUND-- Andrew Beja and Kenneth Winston. Mr. Winston,
[title], joined the investment adviser in August 2000. Before joining the
investment adviser, Mr. Winston had served as [title] of Standish, Ayer &
Wood, Inc. since [date]. Previously, Mr. Winston was a [title] at
[company]. For a description of Mr. Beja, see LMI Small Cap Growth Fund
above.

LMI SMALL CAP TAX-SENSITIVE FUND-- Nicholas S. Battelle. For a description
of Mr. Battelle, see LMI Small Cap Growth Fund above.

LMI TECHNOLOGY FUND-- Jonathan F. Stone and Kenneth Winston. Mr. Stone,
[title], joined the investment adviser in August 2000. Before joining the
investment adviser, Mr. Stone had served as associate director and senior
portfolio manager of Standish, Ayer & Wood, Inc. since 1997. Previously,
Mr. Stone was a vice president of equity research at Adams, Harkness &
Hill. For a description of Mr. Winston, see LMI Mid Cap Growth Fund above.

LMI INTERNET FUND -- Lee P. Munder, Adam L. Munder and Ryan J. Munder.
Before founding the investment adviser, Mr. Lee Munder was founder and
chief executive officer of Munder Capital Management. Before joining the
investment adviser as an associate in February 2000, Mr. Adam Munder was a
marketing associate at Johnson & Johnson since June 1998 and previously was
an associate at Munder Capital Management. Before joining the investment
adviser as an associate in February 2000, Mr. Ryan Munder was an analyst at
BlackRock Financial Management from July 1998 through May 1999 and
previously was an associate at Munder Capital Management.

DISTRIBUTOR
Funds Distributor, Inc. acts as distributor of the Funds' shares.

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<PAGE> 29

[back cover]

LMI FUNDS
--------------------------------------------------------------------------------

FOR MORE INFORMATION
More information on the Funds is available upon request, including the
following:

SHAREHOLDER REPORTS. Additional information about the Funds' investments is
available in each Fund's annual and semi-annual reports to shareholders. In each
Fund's annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance during
its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI). The SAI includes more information
about each Fund and its policies. The SAI is on file with the Securities and
Exchange Commission (SEC) and is incorporated by reference into (is legally
considered a part of) this prospectus.

You may request free copies of these materials, along with other information
about the Funds and make shareholder inquiries by contacting:

LMI Funds
[address]
Telephone: 1-800-xxx-xxxx
Hearing impaired: TTY 1-800-xxx-xxxx
Internet site: http://www.leemunder.com

Text-only versions of the Fund's prospectus can be viewed online or downloaded
from Lee Munder Investments, Ltd. (http://www.leemunder.com). The Funds'
prospectus and other documents pertaining to the Funds also can be viewed online
or downloaded from the SEC (http://www.sec.gov).

You also can review and copy information about the Fund, including the SAI, at
the SEC's public reference room in Washington, DC. For a duplicating fee, you
may obtain copies of this information by writing to the SEC's Public Reference
Section, Washington, DC 20549-0102 or by electronic request at
[email protected]. For more information about these services, call the SEC at
1-202-942-8090.

The Fund's investment company registration number is [smaller font:] 811-xxxx.

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<PAGE> 30

[next column]

LMI FUNDS

LMI SMALL CAP GROWTH FUND
LMI MID CAP GROWTH FUND
LMI SMALL CAP TAX-SENSITIVE FUND
LMI TECHNOLOGY FUND
LMI INTERNET FUND

PROSPECTUS

[LMI Funds logo]

[prospectus date]
<PAGE> 31
--------------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Statement of Additional
Information does not constitute a prospectus.
--------------------------------------------------------------------------------

LMI FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MA 02109

STATEMENT OF ADDITIONAL INFORMATION
[DATE]

This Statement of Additional Information (the "SAI") is not a prospectus.
It should be read in conjunction with the prospectus dated [date] (the
"Prospectus") for LMI Small Cap Growth Fund, LMI Mid Cap Growth Fund, LMI
Small Cap Tax-Sensitive Fund, LMI Technology Fund and LMI Internet Fund,
each a series of LMI Funds.

To obtain a free copy of the Prospectus, please write to [ ], or call
1-800-[ ].

TABLE OF CONTENTS
PAGE

GENERAL INFORMATION ABOUT THE FUNDS..................................

INVESTMENT POLICIES AND RESTRICTIONS ................................

PORTFOLIO TRANSACTIONS ..............................................

TRUSTEES AND EXECUTIVE OFFICERS .....................................

INVESTMENT MANAGEMENT AND OTHER SERVICES ............................

DIVIDENDS AND TAXES .................................................

SHARE PRICE CALCULATION .............................................

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION ......................

PERFORMANCE .........................................................

SHAREHOLDER INFORMATION .............................................

<PAGE> 32

LMI FUNDS
--------------------------------------------------------------------------------

PLEASE NOTE:

As used in this SAI, the following terms shall have the meanings listed:

"1933 Act" means the Securities Act of 1933, as amended.

"1940 Act" means the Investment Company Act of 1940, as amended.

"Code" means the Internal Revenue Code of 1986, as amended.

"Fund" means LMI Small Cap Growth Fund, LMI Mid Cap Growth Fund, LMI Small
Cap Tax- Sensitive Fund, LMI Technology Fund or LMI Internet Fund individually,
each a series of the Trust.

"Funds" means LMI Small Cap Growth Fund, LMI Mid Cap Growth Fund, LMI Small
Cap Tax- Sensitive Fund, LMI Technology Fund and LMI Internet Fund collectively,
unless the context indicates otherwise.

"Investment Adviser" means Lee Munder Investments, Ltd.

"Trust" means LMI Funds, a Massachusetts business trust.

GENERAL INFORMATION ABOUT THE FUNDS

The Trust is registered under the 1940 Act as an open-end management investment
company. The Funds are currently the only series of the Trust. The Trust was
formed on June 29, 2000 as a Massachusetts business trust.

INVESTMENT POLICIES AND RESTRICTIONS

The following supplements the discussion in the Prospectus of the Funds'
investment objectives and their principal and additional investment strategies,
policies and risks. These investment strategies and policies may be changed
without shareholder approval unless otherwise noted. Capitalized terms not
otherwise defined in this SAI have the same meanings as in the Prospectus.

Whenever an investment policy or restriction of a Fund described in the
Prospectus or in this SAI states a maximum percentage of assets that may be
invested in a security or other asset, or describes a policy regarding quality
standards, that percentage limitation or standard will, unless otherwise
indicated, apply to the Fund only at the time a transaction takes place. Thus,
if a percentage limitation is adhered to at the time of investment, a later
increase or decrease in the percentage that results from circumstances not
involving any affirmative action by the Fund will not be considered a violation.

-2-
<PAGE> 33

Descriptions in this SAI of a particular investment practice or technique in
which a Fund may engage or a financial instrument that the Fund may purchase are
meant to describe the spectrum of investments that the Investment Adviser, in
its discretion, might, but is not required to, use in managing the Fund's
portfolio assets. The Investment Adviser may, in its discretion, at any time
employ such practice, technique or instrument for one or more funds or accounts
but not for all funds or accounts advised by it. Furthermore, it is possible
that certain types of financial instruments or investment techniques described
herein may not, in the judgment of the Investment Adviser, be available,
permissible, economically feasible or effective for their intended purposes in
some or all markets, in which case the Fund would not use them. Certain
practices, techniques or instruments may not be principal activities of the Fund
but, to the extent employed, could from time to time have a material impact on
the Fund's performance.

Each Fund's investment objective, and its investment policies and restrictions
that are designated as fundamental, may not be changed without approval by
holders of a "majority of the outstanding voting securities" of the Fund. Except
as otherwise indicated, however, each Fund's investment policies are not
fundamental and may be changed without shareholder approval. As defined in the
1940 Act, and as used herein, the term "majority of the outstanding voting
securities" of the Trust, or of a Fund, means, respectively, the vote of the
holders of the lesser of (i) 67% of the shares of the Trust or of the Fund
present or represented by proxy at a meeting where more than 50% of the
outstanding shares of the Trust or the Fund are present or represented by proxy,
or (ii) more than 50% of the outstanding shares of the Trust or of the Fund.

COMMON STOCK AND PREFERRED STOCK
Shares of common stock represent a proportionate ownership interest in a
company. As a result, the value of common stock rises and falls with a company's
success or failure. The market value of common stock can fluctuate
significantly. Preferred stock is a class of stock having a preference over
common stock as to dividends and, generally, as to the recovery of investment.

Common stockholders are the owners of the company issuing the stock and,
accordingly, vote on various corporate governance matters such as mergers. They
are not creditors of the company, but rather, upon liquidation of the company
are entitled to their pro rata share of the company's assets after creditors
(including fixed income security holders) and, if applicable, preferred
stockholders are paid. A preferred stockholder is a shareholder in the company
and not a creditor of the company as is a holder of the company's fixed income
securities. Dividends paid to common and preferred stockholders are
distributions of the earnings of the company and not interest payments, which
are expenses of the company.

Stock owned by a Fund may be traded on a securities exchange or in the
over-the-counter market and may not be traded every day or in the volume typical
of securities traded on a major national securities exchange. As a result,
disposition by a Fund of a portfolio security to meet redemptions by
shareholders or otherwise may require the Fund to sell these securities at a
discount from market prices, to sell during periods when disposition is not
desirable, or to make many small sales over an extended period of time. The
market value of all securities, including equity securities, is based upon the
market's perception of value and not necessarily the book value of an issuer or
other objective measure of a company's worth.

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WARRANTS
To the extent that such investments are consistent with its investment
objective, the Funds may invest in warrants. The holder of a warrant has the
right, until the warrant expires, to purchase a given number of shares of a
particular issuer at a specified price. Such investments can provide a greater
potential for profit or loss than an equivalent investment in the underlying
security. However, prices of warrants do not necessarily move in tandem with the
prices of the underlying securities, and are, therefore, considered speculative
investments. Warrants pay no dividends and confer no rights other than a
purchase option. Thus, if a warrant held by a Fund were not exercised by the
date of its expiration, the Fund would lose the entire purchase price of the
warrant. Each Fund may only purchase warrants on securities in which the Fund
may invest directly.

INVESTMENT COMPANY SECURITIES
Each Fund may invest in securities issued by other investment companies that
principally invest in securities of the type in which the Fund invests. Under
the 1940 Act, each Fund's investment in such securities currently is normally
limited, subject to certain exceptions, to (i) 3% of the total voting stock of
any one investment company, (ii) 5% of the Fund's total assets with respect to
any one investment company, and (iii) 10% of the Fund's total assets in the
aggregate. Investments in the securities of other investment companies generally
will involve duplication of advisory fees and certain other expenses. These
investments may include shares of exchange-traded closed-end and open-end funds.

EXCHANGE-TRADED INDEX SECURITIES
Subject to the limitations on investment in investment company securities set
forth above, each Fund may invest in exchange-traded index securities such as
SPDRs, QQQs and WEBS. SPDRs (Standard & Poor's Depositary Receipts), for
example, typically trade like a share of common stock and provide investment
results that generally correspond to the price and yield performance of the
component common stocks of the Standard & Poor's 500 Index. There can be no
assurance that the issuer of SPDRs will replicate and maintain exactly the
composition and relative weightings of the securities in the index. QQQs
(Nasdaq-100 Tracking Stock) are similar to SPDRs except that they track the
Nasdaq-100 Index, an index of 100 non-financial domestic and international
companies listed on the National Association of Securities Dealers' Automated
Quotation System (NASDAQ). These securities are subject to the risks of an
investment in the underlying securities they hold. Because of their composition,
historically QQQs have been more volatile in price than SPDRs.

FOREIGN SECURITIES AND CURRENCIES
Subject to each Fund's investment policies and quality standards, each Fund may
invest in the securities of foreign issuers. The securities of foreign issuers
in which each Fund may invest include non-U.S. dollar-denominated securities,
Eurodollar securities, and sponsored and unsponsored depositary receipts.

Foreign investments may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing and financial
reporting standards and requirements comparable to those applicable to

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U.S. companies. There may be less governmental supervision of foreign securities
markets, brokers and issuers of securities. Securities of some foreign companies
are less liquid or more volatile than securities of U.S. companies, and foreign
brokerage commissions and custodian fees are generally higher than in the United
States. Settlement practices may include delays and may differ from those
customary in United States markets. Investments in foreign securities may also
be subject to other risks that differ from those affecting U.S. investments,
including political or economic developments, expropriation or nationalization
of assets, restrictions on foreign investment and repatriation of capital,
imposition of withholding taxes on dividend or interest payments, currency
blockage (which would prevent cash from being brought back to the United
States), and difficulty in enforcing legal rights outside the United States.

FOREIGN DEPOSITARY RECEIPTS. American Depositary Receipts ("ADRs"), Global
Depositary Receipts, American Depositary Shares, Global Depositary Shares, and
related securities are depositary instruments, the issuance of which is
typically administered by a U.S. or foreign bank or trust company. These
instruments evidence ownership of underlying securities issued by a U.S. or
foreign corporation. ADRs are publicly traded on exchanges or over-the-counter
("OTC") in the United States. Unsponsored programs are organized independently
and without the cooperation of the issuer of the underlying securities. As a
result, information concerning the issuer may not be as current or as readily
available as in the case of sponsored depositary instruments, and their prices
may be more volatile than if they were sponsored by the issuers of the
underlying securities.

FOREIGN CURRENCIES. Investment in foreign securities usually will involve
currencies of foreign countries. Moreover, each Fund may temporarily hold funds
in bank deposits in foreign currencies during the completion of investment
programs and may purchase forward foreign currency contracts. Because of these
factors, the value of the assets of a Fund as measured in U.S. dollars may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations, and a Fund may incur costs in connection with
conversions between various currencies. Although each Fund's custodian values
the Fund's assets daily in terms of U.S. dollars, each Fund does not intend to
convert its holdings of foreign currencies into U.S. dollars on a daily basis.
Each Fund will do so from time to time, however, and investors should be aware
of the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer. Each Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through entering into
forward contracts to purchase or sell foreign currencies.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Fund may enter into forward foreign
currency contracts in order to protect against uncertainty in the level of
future foreign exchange rates in the purchase and sale of securities. A forward
contract is an obligation to purchase or sell a specific currency for an agreed
price at a future date (usually less than a year), and typically is individually
negotiated and privately traded by currency traders and their customers. A
forward contract generally has no deposit requirement, and no commissions are
charged at any

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<PAGE> 36

stage for trades. Although foreign exchange dealers do not charge a fee for
commissions, they do realize a profit based on the difference between the price
at which they are buying and selling various currencies. Although these
contracts are intended to minimize currency risk - the risk of loss due to a
decline in the value of the hedged currencies - at the same time, they tend to
limit any potential gain that might result should the value of such currencies
increase.

DEBT SECURITIES
Investments in fixed-income securities are subject to the general risks inherent
in such securities, primarily interest rate risk and credit risk. Interest rate
risk is the potential for fluctuations in bond prices due to changing interest
rates. In general, bond prices vary inversely with prevailing interest rates. If
prevailing interest rates rise, bond prices generally decline; if prevailing
interest rates fall, bond prices generally rise. In addition, for a given change
in interest rates, longer-maturity bonds generally fluctuate more in price than
shorter-maturity bonds. To compensate investors for these larger fluctuations,
longer-maturity bonds usually offer higher yields than shorter-maturity bonds,
other factors, including credit quality, being equal.

Credit risk is the possibility that an issuer of fixed-income securities held by
a Fund will be unable to make payments of either interest or principal or will
be perceived to have a diminished capacity to make such payments in the future.

U.S. GOVERNMENT SECURITIES
U.S. Government securities are obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities. Securities guaranteed by the U.S.
Government include: (1) direct obligations of the U.S. Treasury (such as
Treasury bills, notes, and bonds) and (2) federal agency obligations guaranteed
as to principal and interest by the U.S. Treasury (such as GNMA certificates,
which are backed by mortgages). When such securities are held to maturity, the
payment of principal and interest is unconditionally guaranteed by the U.S.
Government, and thus they are of the highest possible credit quality. U.S.
Government securities that are not held to maturity are subject to variations in
market value due to fluctuations in interest rates.

Securities issued by U.S. Government instrumentalities and certain federal
agencies are neither direct obligations of nor guaranteed by the U.S. Treasury;
however, they involve federal sponsorship in one way or another. Some are backed
by specific types of collateral, some are supported by the issuer's right to
borrow from the Treasury, some are supported by the discretionary authority of
the Treasury to purchase certain obligations of the issuer, others are supported
only by the credit of the issuing government agency or instrumentality. These
agencies and instrumentalities include, but are not limited to, Federal Land
Banks, Farmers Home Administration, Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks, Federal National Mortgage
Association, Federal Home Loan Mortgage Association, and Student Loan Marketing
Association.

CASH AND SHORT-TERM INVESTMENTS
Each Fund will hold from time to time a certain portion of its assets in cash or
short-term investments to retain flexibility in meeting redemptions, paying
expenses, and timing of new investments. Each Fund also may invest in cash or
short-term investments as part of a temporary defensive strategy when investment
conditions warrant. Short-term investments may include

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<PAGE> 37

(i) short-term obligations issued or guaranteed by the United States Government,
its agencies or instrumentalities, (ii) certificates of deposit, bankers'
acceptances and interest-bearing savings deposits of commercial banks doing
business in the United States that have a minimum rating of A-1 from Standard &
Poor's ("S&P") or P-1 from Moody's Investors Service ("Moody's") or a comparable
rating from another nationally recognized statistical rating organization
("NRSRO") or unrated securities of comparable quality, (iii) commercial paper
rated at least A-1 by S&P or P-1 by Moody's or a comparable rating from another
NRSRO or unrated securities of comparable quality, (iv) repurchase agreements
covering any of the securities in which the Fund may invest directly, and (v)
money market mutual funds.

REPURCHASE AGREEMENTS
Each Fund may enter into a repurchase agreement wherein the seller of a security
to a Fund agrees to repurchase that security from the Fund at a mutually-agreed
upon time and price. The period of maturity is usually quite short, often
overnight or a few days, although it may extend over a number of months. Each
Fund may enter into repurchase agreements only with respect to securities that
could otherwise be purchased by the Fund and pursuant to an agreement that
requires that additional securities be deposited with the custodian if the value
of the securities purchased should decrease below the repurchase price.

A Fund may incur a loss on a repurchase transaction if the seller defaults and
the value of the underlying collateral declines or is otherwise limited or if
receipt of the security or collateral is delayed. The Fund's custodian (or a
sub-custodian) has custody of, and holds in a segregated account, securities
acquired as collateral by the Fund under a repurchase agreement. All repurchase
transactions must be collateralized.

In an attempt to reduce the risk of incurring a loss on a repurchase agreement,
each Fund limits investments in repurchase agreements to selected creditworthy
securities dealers or domestic banks or other recognized financial institutions.
The Investment Adviser monitors on an ongoing basis the value of the collateral
to assure that it always equals or exceeds the repurchase price.

OPTIONS

GENERAL. A call option is a short-term contract (having a duration of less than
one year) pursuant to which the purchaser, in return for the premium paid, has
the right to buy the security underlying the option at the specified exercise
price at any time during the term of the option. The writer of the call option,
who receives the premium, has the obligation, upon exercise of the option, to
deliver the underlying security against payment of the exercise price. A put
option is a similar contract pursuant to which the purchaser, in return for the
premium paid, has the right to sell the security underlying the option at the
specified exercise price at any time during the term of the option. The writer
of the put option, who receives the premium, has the obligation, upon exercise
of the option, to buy the underlying security at the exercise price. The premium
paid by the purchaser of an option will reflect, among other things, the
relationship of the exercise price to the market price and volatility of the
underlying security, the time remaining to expiration of the option, supply and
demand, and interest rates.

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<PAGE> 38

If the writer of a U.S. exchange-traded option wishes to terminate the
obligation, the writer may effect a "closing purchase transaction." This is
accomplished by buying an option of the same series as the option previously
written. The effect of the purchase is that the writer's position will be
canceled by the Options Clearing Corporation. However, a writer may not effect a
closing purchase transaction after it has been notified of the exercise of an
option. Likewise, an investor who is the holder of an option may liquidate his
or her position by effecting a "closing sale transaction." This is accomplished
by selling an option of the same series as the option previously purchased.
There is no guarantee that either a closing purchase or a closing sale
transaction can be effected at any particular time or at an acceptable price. If
any call or put option is not exercised or sold, it will become worthless on its
expiration date. Closing purchase transactions are not available for OTC
transactions. In order to terminate an obligations in an OTC transaction, the
Fund would need to negotiate directly with the counterparty.

Each Fund will realize a gain (or a loss) on a closing purchase transaction with
respect to a call or a put previously written by the Fund if the premium, plus
commission costs, paid by the Fund to purchase the call or the put is less (or
greater) than the premium, less commission costs, received by the Fund on the
sale of the call or the put. A gain also will be realized if a call or a put
that the Fund has written lapses unexercised, because the Fund would retain the
premium. Any such gains (or losses) are considered short-term capital gains (or
losses) for federal income tax purposes. Net short-term capital gains, when
distributed by the Fund, are taxable as ordinary income. See "Dividends and Tax
Status."

Each Fund will realize a gain (or a loss) on a closing sale transaction with
respect to a call or a put previously purchased by the Fund if the premium, less
commission costs, received by the Fund on the sale of the call or the put is
greater (or less) than the premium, plus commission costs, paid by the Fund to
purchase the call or the put. If a put or a call expires unexercised, it will
become worthless on the expiration date, and the Fund will realize a loss in the
amount of the premium paid, plus commission costs. Any such gain or loss will be
long-term or short-term gain or loss, depending upon the Fund's holding period
for the option.

Exchange-traded options generally have standardized terms and are issued by a
regulated clearing organization (such as the Options Clearing Corporation),
which, in effect, guarantees the completion of every exchange-traded option
transaction. In contrast, the terms of OTC options are negotiated by the Fund
and its counterparty (usually a securities dealer or a financial institution)
with no clearing organization guarantee. When the Fund purchases an OTC option,
it relies on the party from whom it has purchased the option (the
"counterparty") to make delivery of the instrument underlying the option. If the
counterparty fails to do so, the Fund will lose any premium paid for the option,
as well as any expected benefit of the transaction. Accordingly, the Investment
Adviser will assess the creditworthiness of each counterparty to determine the
likelihood that the terms of the OTC option will be satisfied.

PURCHASING OPTIONS. Each Fund may purchase put options on securities held in its
portfolio or securities indices the performance of which is substantially
correlated with securities held in its portfolio. When a Fund purchases a put
option, in consideration for an upfront payment (the "option premium") the Fund
acquires a right to sell to another party specified securities owned by the Fund
at a specified price (the "exercise price") on or before a specified date (the

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<PAGE> 39

"expiration date"), in the case of an option on securities, or to receive from
another party a payment based on the amount a specified securities index
declines below a specified level on or before the expiration date, in the case
of an option on a securities index. The purchase of a put option limits the
Fund's risk of loss in the event of a decline in the market value of the
portfolio holdings underlying the put option prior to the option's expiration
date. If the market value of the portfolio holdings associated with the put
option increases rather than decreases, however, the Fund will lose the option
premium and will consequently realize a lower return on the portfolio holdings
than would have been realized without the purchase of the put.

Each Fund also is authorized to purchase call options on securities it intends
to purchase or securities indices. When a Fund purchases a call option, in
consideration for the option premium the Fund acquires the right to purchase
from another party specified securities at the exercise price on or before the
expiration date, in the case of an option on securities, or to receive from
another party a payment based on the amount a specified securities index
increases beyond a specified level on or before the expiration date, in the case
of an option on a securities index. The purchase of a call option may protect
the Fund from having to pay more for a security as a consequence of increases in
the market value for the security during a period when the Fund is contemplating
its purchase, in the case of an option on a security, or attempting to maintain
exposure to an index prior to purchasing the underlying securities, in the case
of an option on an index (an "anticipatory hedge"). In the event the Fund
determines not to purchase a security underlying a call option, however, the
Fund may lose the entire option premium.

Each Fund is also authorized to purchase put or call options in connection with
closing out put or call options it has previously sold.

WRITING OPTIONS. Each Fund may write (i.e., sell) call options on securities
held in its portfolio or securities indices, the performance of which is
substantially correlated to securities held in its portfolio. When a Fund writes
a call option, in return for an option premium the Fund gives another party the
right to buy specified securities owned by the Fund at the exercise price on or
before the expiration date, in the case of an option on securities, or agrees to
pay to another party an amount based on any gain in a specified securities index
beyond a specified level on or before the expiration date, in the case of an
option on a securities index. In the event the party to which the Fund has
written an option fails to exercise its rights under the option because the
value of the underlying securities is less than the exercise price, the Fund
will partially offset any decline in the value of the underlying securities
through the receipt of the option premium. By writing a call option, however,
the Fund limits its ability to sell the underlying securities, and gives up the
opportunity to profit from any increase in the value of the underlying
securities beyond the exercise price, while the option remains outstanding.

Each Fund also may write put options on securities or securities indices. When
the Fund writes a put option, in return for an option premium the Fund gives
another party the right to sell to the Fund a specified security at the exercise
price on or before the expiration date, in the case of an option on a security,
or agrees to pay to another party an amount based on any decline in a specified
securities index below a specified level on or before the expiration date, in
the case of an option on a securities index. In the event the party to which a
Fund has written an option fails to exercise its rights under the option because
the value of the underlying securities is greater

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<PAGE> 40

than the exercise price, the Fund will profit by the amount of the option
premium. By writing a put option, however, the Fund will be obligated to
purchase the underlying security at a price that may be higher than the market
value of the security at the time of exercise as long as the put option is
outstanding, in the case of an option on a security, or make a cash payment
reflecting any decline in the index, in the case of an option on an index.
Accordingly, when a Fund writes a put option it is exposed to a risk of loss in
the event the value of the underlying securities falls below the exercise price,
which loss potentially may substantially exceed the amount of option premium
received by the Fund for writing the put option. The Fund will write a put
option on a security or a securities index only if the Fund would be willing to
purchase the security at the exercise price for investment purposes (in the case
of an option on a security) or is writing the put in connection with trading
strategies involving combinations of options -- for example, the sale and
purchase of options on the same security or index but different expiration dates
or exercise prices (a technique called a "spread").

Each Fund may sell call or put options in connection with closing out call or
put options it has previously purchased.

Other than with respect to closing transactions, each Fund will only write call
or put options that are "covered." A put option will be considered covered if
the Fund has segregated assets with respect to such option in the manner
described below. A call option will be considered covered if the Fund owns the
securities it would be required to deliver upon exercise of the option (or, in
the case of an option on a securities index, securities that substantially
replicate the performance of such index) or owns a call option, warrant or
convertible instrument that is immediately exercisable for, or convertible into,
such security.

RISKS OF OPTIONS TRANSACTIONS. The purchase and writing of options involves
certain risks. During the option period, the covered call writer has, in return
for the premium on the option, given up the opportunity to profit from a price
increase in the underlying securities above the exercise price, but, as long as
its obligation as a writer continues, has retained the risk of loss should the
price of the underlying security decline. The writer of a U.S. option has no
control over the time when it may be required to fulfill its obligation as a
writer of the option. Once an option writer has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver the underlying securities (or cash
in the case of an index option) at the exercise price. If a put or call option
purchased by a Fund is not sold when it has remaining value, and if the market
price of the underlying security (or index), in the case of a put, remains equal
to or greater than the exercise price or, in the case of a call, remains less
than or equal to the exercise price, the Fund will lose its entire investment in
the option. Also, where a put or call option on a particular security (or index)
is purchased to hedge against price movements in a related security (or
securities), the price of the put or call option may move more or less than the
price of the related security (or securities). In this regard, there are
differences between the securities and options markets that could result in an
imperfect correlation between these markets, causing a given transaction not to
achieve its objective.

There can be no assurance that a liquid market will exist when a Fund seeks to
close out an option position. Furthermore, if trading restrictions or
suspensions are imposed on the options markets, the Fund may be unable to close
out a position. Finally, trading could be interrupted,

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<PAGE> 41

for example, because of supply and demand imbalances arising from a lack of
either buyers or sellers, or the options exchange could suspend trading after
the price has risen or fallen more than the maximum amount specified by the
exchange. Closing transactions can be made for OTC options only by negotiating
directly with the counterparty or by a transaction in the secondary market, if
any such market exists. Transfer of an OTC option is usually prohibited absent
the consent of the original counterparty. There is no assurance that a Fund will
be able to close out an OTC option position at a favorable price prior to its
expiration. An OTC counterparty may fail to deliver or to pay, as the case may
be. In the event of insolvency of the counterparty, a Fund might be unable to
close out an OTC option position at any time prior to its expiration. Although
the Fund may be able to offset to some extent any adverse effects of being
unable to liquidate an option position, the Fund may experience losses in some
cases as a result of such inability.

When conducted outside the U.S., options transactions may not be regulated as
rigorously as in the U.S., may not involve a clearing mechanism and related
guarantees, and are subject to the risk of governmental actions affecting
trading in, or the prices of, foreign securities, currencies and other
instruments. The value of such positions also could be adversely affected by:
(i) other complex foreign political, legal and economic factors, (ii) lesser
availability than in the U.S. of data on which to make trading decisions, (iii)
delays in the Fund's ability to act upon economic events occurring in foreign
markets during non-business hours in the U.S., (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
U.S., and (v) lower trading volume and liquidity.

Each Fund's options activities also may have an impact upon the level of its
portfolio turnover and brokerage commissions.

Each Fund's success in using options techniques depends, among other things, on
the Investment Adviser's ability to predict accurately the direction and
volatility of price movements in the options and securities markets, and to
select the proper type, timing of use and duration of options.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

GENERAL. Each Fund may enter into futures contracts and options on futures
contracts for any number of reasons, including as a cash management tool and as
a means of managing its exposure to changes in securities prices and foreign
currencies, adjusting its overall exposure to certain markets, attempting to
enhance income, and protecting the value of its portfolio securities. A futures
contract provides for the future sale by one party and purchase by another party
of a specified quantity of a commodity at a specified price and time. When a
purchase or sale of a futures contract is made by a Fund, the Fund is required
to deposit with its custodian (or broker, if legally permitted) a specified
amount of cash or liquid securities ("initial margin"). The margin required for
a futures contract is set by the exchange on which the contract is traded and
may be modified during the term of the contract. The initial margin is in the
nature of a performance bond or good faith deposit on the futures contract that
is returned to the Fund upon termination of the contract, assuming all
contractual obligations have been satisfied. A futures contract held by the Fund
is valued daily at the official settlement price of the exchange on

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<PAGE> 42

which it is traded. Each day the Fund pays or receives cash, called "variation
margin," equal to the daily change in value of the futures contract. This
process is known as "marking to market." Variation margin does not represent a
borrowing or loan by the Fund but is instead a settlement between the Fund and
the broker of the amount one would owe the other if the futures contract
expired. In computing daily net asset value, the Fund will mark-to-market its
open futures position.

Each Fund also is required to deposit and maintain margin with respect to put
and call options on futures contracts written by it. Such margin deposits will
vary depending on the nature of the underlying futures contract (and the related
initial margin requirements), the current market value of the option, and other
futures positions held by the Fund.

Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery of offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund generally realizes
a capital gain, or if it is more, the Fund generally realizes a capital loss.
Conversely, if an offsetting sale price is more than the original purchase
price, the Fund generally realizes a capital gain, or if it is less, the Fund
generally realizes a capital loss. The transaction costs must also be included
in these calculations.

When purchasing a futures contract, each Fund will segregate (and mark-to-market
on a daily basis) cash or liquid securities that, when added to the amounts
deposited with a futures commission merchant ("FCM") as margin, are equal to the
market value of the futures contract. Alternatively, a Fund may "cover" its
position by purchasing a put option on the same futures contract with a strike
price as high as or higher than the price of the contract held by the Fund, or,
if lower, may cover the difference with cash or short-term securities.

When selling a futures contract, each Fund will segregate (and mark-to-market on
a daily basis) cash or liquid securities that, when added to the amounts
deposited with an FCM as margin, are equal to the market value of the
instruments underlying the contract. Alternatively, each Fund may "cover" its
position by owning the instruments underlying the contract (or, in the case of
an index futures contract, a portfolio with a volatility substantially similar
to that of the index on which the futures contract is based), or by holding a
call option permitting the Fund to purchase the same futures contract at a price
no higher than the price of the contract written by the Fund (or at a higher
price if the difference is maintained in liquid assets with the Fund's
custodian).

When selling a call option on a futures contract, each Fund will segregate (and
mark-to-market on a daily basis) cash or liquid securities that, when added to
the amounts deposited with an FCM as margin, equal the total market value of the
futures contract underlying the call option. Alternatively, each Fund may cover
its position by entering into a long position in the same futures contract at a
price no higher than the strike price of the call option, by owning the
instruments underlying the futures contract, or by holding a separate call
option permitting the Fund to purchase the same futures contract at a price not
higher than the strike price of the call option sold by the Fund, or covering
the difference if the price is higher.

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<PAGE> 43

When selling a put option on a futures contract, each Fund will segregate (and
mark-to-market on a daily basis) cash or liquid securities that equal the
purchase price of the futures contract less any margin on deposit.
Alternatively, each Fund may cover the position either by entering into a short
position in the same futures contract, or by owning a separate put option
permitting it to sell the same futures contract so long as the strike price of
the purchased put option is the same or higher than the strike price of the put
option sold by the Fund, or, if lower, the Fund may hold securities to cover the
difference.

RISKS ASSOCIATED WITH FUTURES AND RELATED OPTIONS. There can be no guarantee
that there will be a correlation between price movements in the futures contract
or option and in the securities to which these instruments relate, which may
result in a strategy employing these instruments not to achieve its objective.
The degree of imperfection of correlation depends on circumstances such as
variations in speculative market demand for futures and futures options on
securities, including technical influences in futures trading and futures
options, and differences between the financial instruments being hedged and the
instruments underlying the standard contracts available for trading in such
respects as interest rate levels, maturities and creditworthiness of issuers. A
decision as to whether, when and how to hedge involves the exercise of skill and
judgment, and even a well-conceived hedging strategy may be unsuccessful to some
degree because of market behavior or unexpected interest rate trends.

Future exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of the current trading
session. Once the daily limit has been reached in a futures contract subject to
the limit, no more trades may be made on that day at a price beyond that limit.
The daily limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.

There can be no assurance that a liquid market will exist at a time when a Fund
seeks to close out a futures or a futures option position, and the Fund would
remain obligated to meet margin requirements until the position is closed. In
addition, there can be no assurance that an active secondary market will
continue to exist.

Currency futures contracts and options thereon may be traded on foreign
exchanges. Such transactions may not be regulated as effectively as similar
transactions in the United States; may not involve a clearing mechanism and
related guarantees; and are subject to the risk of governmental actions
affecting trading in, or the prices of, foreign securities. The value of such
position also could be adversely affected by (i) other complex foreign
political, legal and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in the
Fund's ability to act upon economic events occurring in foreign markets during
non business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.

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<PAGE> 44

SECURITIES INDEX FUTURES CONTRACTS. Each Fund also may enter into securities
index futures contracts as an efficient means of gaining exposure to the equity
and bond markets. Each Fund will not engage in transactions in futures contracts
for speculation.

An index futures contract is a contract to buy or sell units of an index at a
specified future date at a price agreed upon when the contract is made. Entering
into a contract to buy units of an index is commonly referred to as purchasing a
contract or holding a long position in the index. Entering into a contract to
sell units of an index is commonly referred to as selling a contract or holding
a short position. The value of a unit is the current value of the stock index.

RISKS OF SECURITIES INDEX FUTURES. Each Fund's success in using futures and
options for hedging depends, among other things, on the Investment Adviser's
ability to predict correctly the direction and volatility of price movements in
the futures and options markets as well as in the securities markets and to
select the proper type, time and duration of the hedging instrument. The skills
necessary for successful use of hedging instruments are different from those
used in the selection of individual stocks.

Each Fund's ability to hedge effectively all or a portion of its securities
through transactions in index futures (and therefore the extent of its gain or
loss on such transactions) depends on the degree to which price movements in the
underlying index correlate with price movements in the Fund's securities.
Inasmuch as such securities will not duplicate the components of an index, the
correlation probably will not be perfect. Consequently, the Fund will bear the
risk that the prices of the securities being hedged will not move in the same
amount as the hedging instrument. This risk will increase as the composition of
the Fund's portfolio diverges from the composition of the hedging instrument.

Although each Fund intends to establish positions in futures only when there
appears to be an active market, there is no assurance that a liquid market will
exist at a time when the Fund seeks to close a particular option or futures
position. Trading could be interrupted, for example, because of supply and
demand imbalances arising from a lack of either buyers or sellers. In addition,
the futures exchanges may suspend trading after the price has risen or fallen
more than the maximum amount specified by the exchange. In some cases, a Fund
may experience losses as a result of its inability to close out a position, and
it may have to liquidate other investments to meet its cash needs.

Although some index futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, each Fund generally
realizes a capital gain, or if it is more, the Fund generally realizes a capital
loss. Conversely, if an offsetting sale price is more than the original purchase
price, the Fund generally realizes a capital gain, or if it is less, the Fund
generally realizes a capital loss. The transaction costs must also be included
in these calculations.

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<PAGE> 45

Each Fund will only enter into index futures contracts or futures options that
are standardized and traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system. Certain futures
strategies employed by the Fund may not be deemed to be for "bona fide hedging"
purposes, as such term is defined in applicable regulations of the Commodity
Futures Trading Commission. The Fund may enter into these futures contracts only
if the aggregate of initial margin deposits for open futures contract positions
does not exceed 5% of the Fund's total assets.

FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY TRANSACTIONS
Each Fund may purchase or sell securities on a when-issued or delayed-delivery
basis and make contracts to purchase or sell securities for a fixed price at a
future date beyond customary settlement time. Securities purchased or sold on a
when-issued, delayed-delivery or forward commitment basis involve a risk of loss
if the value of the security to be purchased declines, or the value of the
security to be sold increases, before the settlement date. Although the Funds
will generally purchase securities with the intention of acquiring them, the
Funds may dispose of securities purchased on a when-issued, delayed-delivery or
a forward commitment basis before settlement when deemed appropriate.

Certain of the securities in which the Funds may invest will be purchased on a
when-issued basis, in which case delivery and payment normally take place within
45 days after the date of the commitment to purchase. The Funds will make
commitments to purchase securities on a when-issued basis only with the
intention of actually acquiring the securities, but may sell them before the
settlement date if it is deemed advisable. When-issued securities are subject to
market fluctuation, and no income accrues to the purchaser during the period
prior to issuance. The purchase price and the interest rate that will be
received on debt securities are fixed at the time the purchaser enters into the
commitment.

Purchasing a security on a when-issued basis can involve a risk that the market
price at the time of delivery may be lower than the agreed-upon purchase price,
in which case there could be an unrealized loss at the time of delivery. The
Funds will segregate cash or liquid securities in an amount at least equal in
value to each Fund's commitments to purchase when-issued securities. If the
value of these assets declines, the Funds will segregate additional liquid
assets on a daily basis so that the value of the segregated assets is equal to
the amount of such commitments.

REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are transactions in which a Fund sells a security
and simultaneously commits to repurchase that security from the buyer at an
agreed-upon price on an agreed-upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand agreements,
there is no agreed-upon repurchase date and interest payments are calculated
daily, often based upon the prevailing overnight repurchase rate.

Generally, a reverse repurchase agreement enables a Fund to recover for the term
of the reverse repurchase agreement all or most of the cash invested in the
portfolio securities sold and to keep the interest income associated with those
portfolio securities. Such transactions are advantageous only if the interest
cost to the Fund of the reverse repurchase transaction is less

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<PAGE> 46

than the cost of obtaining the cash otherwise. In addition, interest costs on
the money received in a reverse repurchase agreement may exceed the return
received on the investments made by the Fund with those monies. The use of
reverse repurchase agreement proceeds to make investments may be considered to
be a speculative technique.

While a reverse repurchase agreement is outstanding, the Fund will maintain
appropriate liquid assets in a segregated custodial account to cover its
obligation under the agreement. The Fund will enter into reverse repurchase
agreements only with parties whose creditworthiness has been found satisfactory
by the Investment Adviser.

ILLIQUID SECURITIES
Each Fund may purchase securities other than in the open market. While such
purchases may often offer attractive opportunities for investment not otherwise
available on the open market, the securities so purchased are often "restricted
securities" or "not readily marketable" (i.e., they cannot be sold to the public
without registration under the 1933 Act, or the availability of an exemption
from registration (such as Rule 144A) or because they are subject to other legal
or contractual delays in or restrictions on resale). This investment practice,
therefore, could have the effect of increasing the level of illiquidity of the
Funds. It is the Funds' policy that illiquid securities (including repurchase
agreements of more than seven days duration, certain restricted securities, and
other securities that are not readily marketable) may not constitute, at the
time of purchase, more than 15% of the value of each Fund's net assets. The
Trust's Board of Trustees has approved guidelines for use in determining whether
a security is illiquid.

Generally speaking, restricted securities may be sold (i) only to qualified
institutional buyers; (ii) in a privately negotiated transaction to a limited
number of purchasers; (iii) in limited quantities after they have been held for
a specified period of time and other conditions are met pursuant to an exemption
from registration; or (iv) in a public offering for which a registration
statement is in effect under the 1933 Act. Issuers of restricted securities may
not be subject to the disclosure and other investor protection requirements that
would be applicable if their securities were publicly traded. If adverse market
conditions were to develop during the period between a Fund's decision to sell a
restricted or illiquid security and the point at which the Fund is permitted or
able to sell such security, the Fund might obtain a price less favorable than
the price that prevailed when it decided to sell. Where a registration statement
is required for the resale of restricted securities, the Fund may be required to
bear all or part of the registration expenses. Each Fund may be deemed to be an
"underwriter" for purposes of the 1933 Act when selling restricted securities to
the public and, in such event, a Fund may be liable to purchasers of such
securities if the registration statement prepared by the issuer is materially
inaccurate or misleading.

Since it is not possible to predict with assurance that the market for
securities eligible for resale under Rule 144A will continue to be liquid, the
Investment Adviser will monitor such restricted securities. Among the factors
the Investment Adviser may consider in reaching liquidity decisions relating to
Rule 144A securities are: (1) the frequency of trades and quotes for the
security; (2) the number of dealers wishing to purchase or sell the security and
the number of other potential purchasers; (3) dealer undertakings to make a
market in the security; and (4) the

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<PAGE> 47

nature of the security and the nature of the market for the security (i.e., the
time needed to dispose of the security, the method of soliciting offers, and the
mechanics of the transfer).

SECURITIES LENDING
Each Fund may lend securities from its portfolios to brokers, dealers and
financial institutions (but not individuals) in order to increase the return on
its portfolio. The value of the loaned securities may not exceed 33 1/3% of each
Fund's total assets and loans of portfolio securities must be fully
collateralized based on values that are marked-to-market daily. Each Fund will
not enter into any portfolio security lending arrangement having a duration of
longer than one year. In determining whether to lend a security to a particular
broker, dealer or financial institution, the Investment Adviser considers all
relevant facts and circumstances, including the size, creditworthiness and
reputation of the broker, dealer or financial institution. The principal risk of
portfolio lending is potential default or insolvency of the borrower. In either
of these cases, the Fund could experience delays in recovering securities or
collateral or could lose all or part of the value of the loaned securities. Each
Fund may pay reasonable administrative and custodial fees in connection with
loans of portfolio securities and may pay a portion of the interest or fee
earned thereon to the borrower or a placing broker.

Any securities that a Fund may receive as collateral will not become part of a
Fund's investment portfolio at the time of the loan and, in the event of a
default by the borrower, the Fund will, if permitted by law, dispose of such
collateral except for such part thereof that is a security in which the Fund is
permitted to invest. During the time securities are on loan, the borrower will
pay the Fund any accrued income on those securities, and the Fund may invest the
cash collateral and earn income or receive an agreed upon fee from a borrower
that has delivered cash-equivalent collateral.

BORROWING
Borrowing may exaggerate the effect on the Funds' net asset value of any
increase or decrease in the value of the Funds' portfolio securities. Money
borrowed will be subject to interest costs (which may include commitment fees
and/or the cost of maintaining minimum average balances). Although the principal
of a Fund's borrowings will be fixed, the Fund's assets may change in value
during the time a borrowing is outstanding, thus increasing exposure to capital
risk. Each Fund's borrowings may not exceed 33 1/3% of its total assets. Each
Fund may borrow up to an additional 5% of its total assets (not including the
amount borrowed) from a bank for temporary or emergency purposes (but not for
leverage or the purchase of investments). If a Fund's borrowings were to exceed
33 1/3%, a Fund may be required to sell securities in order to reduce its
borrowings. Each Fund may not make additional purchases when borrowings exceed
5%.

DIVERSIFICATION
Each Fund other than LMI Technology Fund and LMI Internet Fund is classified as
"diversified," which generally means that, with respect to 75% of its total
assets (i) no more than 5% of the Fund's total assets may be invested in the
securities of a single issuer and (ii) each fund will purchase no more than 10%
of the outstanding voting securities of a single issuer.

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<PAGE> 48

Each of LMI Technology Fund and LMI Internet Fund is classified as
"non-diversified," which means that it is not limited by the 1940 Act with
regard to the portion of its assets that may be invested in the securities of a
single issuer. To the extent a Fund makes investments in excess of 5% of its
assets in the securities of a particular issuer, its exposure to the risks
associated with that issuer is increased. Because each Fund invests in a limited
number of issuers, the performance of particular securities may adversely affect
the performance of the Fund or subject the Fund to greater price volatility than
that experienced by diversified investment companies.

CONCENTRATION
Generally, each Fund except LMI Technology Fund and LMI Internet Fund may not
"concentrate" its assets in securities related to a particular industry.
Concentration, as the term is used in the Investment Company Act, means that at
least 25% of the Fund's assets would be invested in the securities of issuers
within the same industry.

LMI Technology Fund invests at least 25% of its assets in the securities of
companies in the technology sector. This sector comprises companies in several
industries and includes companies such as those expected to benefit from the
development, advancement, and use of science and technology, such as those in
the computer, telecommunications, electronics and biotechnology industries, as
more fully described in the Prospectus. LMI Internet Fund generally will invest
more than 25% of its assets in the securities of companies in the internet
sector. This sector comprises companies in several industries, and includes
companies such as those engaged in development, manufacturing, research or
design of products and services facilitating the use of the internet or
intranets, or engaged to a significant extent in the business of distributing
products, processes or services via the internet, as more fully described in the
Prospectus. To the extent that a Fund's investments are invested in a particular
sector or industry, the Fund will be subject to greater market fluctuation than
a fund that has securities representing a broader range of investment
alternatives.

COMBINED TRANSACTIONS
Each Fund may enter into multiple transactions, including multiple options
transactions, multiple futures transactions and multiple currency transactions
(including forward currency contracts) and some combination of futures, options,
and currency transactions ("component" transactions), instead of a single
transaction, as part of a single or combined strategy when, in the opinion of
the Investment Adviser, it is in the best interests of the Fund to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Investment Adviser's judgment that the combined
strategies will reduce risk or otherwise more effectively achieve the desired
portfolio management goal, it is possible that the combination will instead
increase such risks or hinder achievement of the management objective.

FUTURE DEVELOPMENTS
Each Fund may take advantage of opportunities in new types of securities or
derivative investments that are not presently contemplated for use by the Fund
or that are not currently available but that may be developed, to the extent
such opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund.

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<PAGE> 49

PORTFOLIO TURNOVER
A change in securities held by a Fund is known as "portfolio turnover." A high
turnover rate may increase transaction costs and result in additional taxable
gains. Each Fund's portfolio turnover rate is calculated by dividing the lesser
of purchases or sales of portfolio securities for the most recently completed
fiscal year by the monthly average of the value of the portfolio securities
owned by the Fund during that year.

The portfolio turnover rate will not be a limiting factor when the Investment
Adviser deems portfolio changes appropriate.

INVESTMENT RESTRICTIONS

THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS. THE
FUNDS MAY NOT (UNLESS NOTED OTHERWISE):

Each Fund except LMI Technology Fund and LMI Internet Fund may not:

(1) purchase securities of any one issuer (except securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities) if as a
result more than 5% of the Fund's total assets would be invested in such issuer
or the Fund would own or hold more than 10% of the outstanding voting securities
of that issuer; provided, however, that up to 25% of the value of the Fund's
total assets may be invested without regard to the foregoing limitations.

In addition, unless otherwise indicated below, each Fund may not:

(2) issue senior securities, except as permitted under the 1940 Act;

(3) borrow money, except as permitted under the 1940 Act;

(4) act as an underwriter (except as it may be deemed such in a sale of
restricted securities);

(5) invest 25% or more of its total assets (taken at market value at the time of
such investment) in the securities of issuers in any particular industry except
that (i) there shall be no limitation with respect to investments in obligations
of the U.S. Government, its agencies or instrumentalities (or repurchase
agreements thereto); (2) SPDRs, QQQs and similar exchange-traded index
securities are divided according to the industries of their underlying common
stocks; (3) LMI Technology Fund will invest at least 25% of its total assets in
the securities of technology companies, as determined by the investment adviser
and as described in the Prospectus and SAI, except when investing for defensive
purposes; and (4) LMI Internet Fund will invest at least 25% of its total assets
in the securities of internet companies, as determined by the investment adviser
and as described in the Prospectus and SAI, except when investing for defensive
purposes.

(6) purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);

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<PAGE> 50

(7) buy or sell physical commodities or physical commodity (futures) contracts,
which do not include financial futures and options thereon as described in the
Prospectus and SAI from time to time; or

(8) lend any security or make any other loan if, as a result, more than 33 1/3%
of its total assets at the time of the loan would be loaned to other parties,
but this limit does not apply to purchases of debt securities or to repurchase
agreements.

THE FOLLOWING INVESTMENT RESTRICTIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED BY
VOTE OF THE BOARD OF TRUSTEES WITHOUT SHAREHOLDER APPROVAL.

The Funds may not:

(i) purchase or hold any security if, as a result, more than 15% of its net
assets would be invested in securities that are deemed to be illiquid because
they are subject to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued, including repurchase
agreements not entitling the holder to payment of principal and interest within
seven days upon notice and securities restricted as to disposition under federal
securities laws, except for certain securities, including commercial paper
issued in reliance on the "private placement" exemption afforded by Section 4(2)
of the 1933 Act, securities eligible for resale pursuant to Rule 144A under the
1933 Act and other securities, that are determined to be liquid pursuant to
procedures adopted by the Trust's Board of Trustees;

(ii) make short sales of securities, except as may be described in the
Prospectus and SAI from time to time, or purchase securities on margin (but the
Fund may obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities); or

(iii) purchase securities of other investment companies, except to the extent
permitted by the 1940 Act; however, the Fund may, notwithstanding any other
investment policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies, and restrictions as the Fund.

PORTFOLIO TRANSACTIONS

The Investment Adviser places orders for the purchase and sale of assets with
brokers and dealers selected by and in the discretion of the Investment Adviser.
In placing orders for the Funds' portfolio transactions, the Investment Adviser
seeks "best execution" (i.e., prompt and efficient execution at the most
favorable prices).

Consistent with the policy of "best execution," orders for portfolio
transactions are placed with broker-dealer firms giving consideration to the
quality, quantity and nature of the firms' professional services, which include
execution, clearance procedures, reliability and other factors. In selecting
among the firms believed to meet the criteria for handling a particular
transaction, the Investment Adviser may give consideration to those firms that
provide market,

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statistical and other research information to the Funds and the Investment
Adviser. In addition, the Funds may pay higher than the lowest available
commission rates when the Investment Adviser believes it is reasonable to do so
in light of the value of the brokerage and research services provided by the
broker effecting the transaction, viewed in terms of either the particular
transaction or the Investment Adviser's overall responsibilities with respect to
accounts as to which it exercises investment discretion. Any research benefits
derived from such services are available for all clients of the Investment
Adviser and might not be used solely in connection with the Funds. Because
statistical and other research information is only supplementary to the
Investment Adviser's research efforts and still must be analyzed and reviewed by
its staff, the receipt of research information is not expected to significantly
reduce its expenses. In no event will a broker-dealer that is affiliated with
the Investment Adviser receive brokerage commissions in recognition of research
services provided to the Investment Adviser.

The Investment Adviser may employ broker-dealer affiliates of the Investment
Adviser (collectively "Affiliated Brokers") to effect portfolio transactions for
the Funds, provided certain conditions are satisfied. Payment of brokerage
commissions to Affiliated Brokers is subject to Section 17(e) of the 1940 Act
and Rule 17e-1 thereunder, which require, among other things, that commissions
for transactions on securities exchanges paid by a registered investment company
to a broker that is an affiliated person of such investment company, or an
affiliated person of another person so affiliated, not exceed the usual and
customary brokers' commissions for such transactions. The Board of Trustees,
including a majority of the trustees who are not "interested persons" of the
Trust within the meaning of such term as defined in the 1940 Act
("Non-Interested Trustees"), has adopted procedures designed to ensure that
commissions paid to affiliates of the Investment Adviser by the Funds satisfy
the standards of Section 17(e) and Rule 17e-1. Certain transactions may be
effected for the Funds by a broker-dealer affiliate of the Investment Adviser at
no net cost to the Funds; however, the broker-dealer may be compensated by
another broker-dealer in connection with such transaction for the order flow to
the second broker-dealer. Receipt of such compensation will be subject to the
Funds' procedures pursuant to Section 17(e) and Rule 17e-1.

The investment decisions for each Fund will be reached independently from those
for each other Fund and any other accounts managed by the Investment Adviser. On
occasions when the Investment Adviser deems the purchase or sale of securities
to be in the best interests of one or more clients of the Investment Adviser,
the Investment Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be so sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Adviser in accordance with its
policy for aggregation of orders, as in effect from time to time. In some cases
this procedure may affect the size or price of the position obtainable for the
Funds.

Purchases and sales of equity securities on exchanges are generally effected
through brokers who charge commissions. In transactions on stock exchanges in
the United States, these commissions generally are negotiated. In all cases, the
Fund will attempt to negotiate best execution.

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Purchases and sales of fixed income portfolio securities are generally effected
as principal transactions. These securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. Purchases from
underwriters of portfolio securities include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers serving as market
makers include the spread between the bid and ask prices. In the case of
securities traded in the over-the-counter markets, there is generally no stated
commission, but the price usually includes an undisclosed commission or markup.

TRUSTEES AND EXECUTIVE OFFICERS

Responsibility for overall management of the Funds rests with the Board of
Trustees of the Trust in accordance with Massachusetts law.

The trustees and executive officers of the Trust, along with their principal
occupations over the past five years and their affiliations, if any, with the
Investment Adviser and Funds Distributor, Inc. ("FDI" or the "Distributor"), the
Funds' distributor, are listed below.

[Trustee/Officer information]

* THIS TRUSTEE IS AN "INTERESTED PERSON" OF THE TRUST.
** ADDRESS: 60 STATE STREET, SUITE 1300, BOSTON, MA 02109

On [ ], the officers and trustees of the Trust, as a group, owned less than 1%
of the outstanding shares of the Funds.

Officers and trustees who are interested persons of the Investment Adviser or
FDI receive no compensation from the Funds. Each trustee who is not an
interested person receives [ ]. Trustees who are interested persons of the Trust
may be compensated by the Investment Adviser or its affiliates for their
services to the Trust.

INVESTMENT MANAGEMENT AND OTHER SERVICES

INVESTMENT MANAGEMENT
Lee Munder Investments, Ltd., 231 Royal Palm Way, Palm Beach FL 33480, is the
Funds' Investment Adviser. The Investment Adviser oversees the Funds' investment
program, places orders for the Funds' purchases and sales of portfolio
securities and maintains records relating to such purchases and sales.

The Investment Adviser was organized in January 2000 and is an investment
adviser registered with the SEC. In addition to the Funds, the Investment
Adviser provides investment advisory services to private accounts and, as of
June 30, 2000, had approximately $100 million under management. Lee P. Munder,
Chairman of the Investment Adviser, directly and indirectly owns or controls a
majority of the partnership interests in the Investment Adviser.

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For the investment advisory services furnished to the Fund, each Fund pays the
Investment Adviser an annual investment management fee, accrued daily and
payable monthly, of 1.00% of the Fund's average daily net assets.

The investment advisory agreement will continue in effect for an initial
two-year term, and thereafter from year to year so long as continuation is
specifically approved at least annually by a vote of the Board of Trustees or by
vote of the shareholders of the Funds, and in either case by a majority of
Non-Interested Trustees who have no direct or indirect financial interest in the
agreement. The investment advisory agreement may be terminated at any time upon
60 days' prior written notice, without penalty, by either party, or by a
majority vote of the outstanding shares of the Funds, and will terminate
automatically upon assignment as defined in the 1940 Act.

The investment advisory agreement provides that the Investment Adviser will not
be liable for any error of judgment or of law, or for any loss suffered by the
Funds in connection with the matters to which such agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
Investment Adviser's part in the performance of its obligations and duties, or
by reason of its reckless disregard of its obligations and duties under such
agreement. The services of the Investment Adviser to the Funds under the
investment advisory agreement are not exclusive and it is free to render similar
services to others.

The Investment Adviser and its affiliates may, from time to time, reduce the
Funds' operating expenses (by paying certain expenses and/or waiving fees).
Expense reductions by the Investment Adviser or its affiliates will increase the
Funds' total return. Unless stated as contractual, expense reductions are
voluntary and may be reduced or eliminated at any time upon notifying investors.

CODES OF ETHICS
The Trust and its Investment Adviser and Distributor have adopted codes of
ethics pursuant to Rule 17j-1 under the 1940 Act with respect to their personnel
with access to information about the purchase or sale of securities by the
Funds. These codes are designed to protect the interests of fund shareholders.
While these codes contain provisions reasonably necessary to prevent personnel
subject to the codes from engaging in unlawful conduct and require compliance
review of securities transactions, they do not prohibit such personnel from
investing in securities, including securities that may be purchased or held by
the Funds so long as such investments are made pursuant to the code's
requirements.

ADMINISTRATION
FDI, 60 State Street, Suite 1300, Boston, MA 02109, provides administrative
services to the Funds pursuant to an administration agreement with the Trust and
the Investment Adviser. Administrative services furnished by FDI include, among
other services, maintaining and preserving the records of the Funds; furnishing
certain officers for the Trust; overseeing the preparation, filing and
maintenance of the Trust's governing documents and minutes of meetings of
trustees, Board committees and shareholders; preparing and filing with the SEC
and other regulators registration statements, notices, reports and other
material required to be filed under applicable laws; and advising the Trust and
the Board on matters concerning the Trust and its

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<PAGE> 54

affairs. For these services, FDI receives an annual fee, accrued daily and
payable monthly, of [ ]. The agreement provides that FDI will not be liable for
any error of judgment or of law, or for any loss suffered by the Funds in
connection with the matters to which the agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under the agreement.

[State Street Bank and Trust Company ("State Street"), 2 Avenue de Lafayette,
Boston, MA 02111], serves as an administrator for the Trust. Pursuant to its
administration agreement with the Trust, State Street oversees the computation
of the Funds' net asset value, net income and realized capital gains, if any;
furnishes statistical and research data, clerical services, and stationery and
office supplies; prepares and files various reports with the appropriate
regulatory agencies; and prepare various materials required by the Securities
and Exchange Commission. State Street may enter into an agreement with one or
more third parties pursuant to which such third parties will provide
administrative services on behalf of the Funds. For these services, State Street
receives an annual fee, accrued daily and payable monthly, of [ ]. The
administration agreement provides that State Street shall not be liable under
the agreement except for its bad faith, gross negligence or willful misconduct
in the performance of its duties and obligations thereunder.

DISTRIBUTION
FDI is the Distributor of the Funds. Pursuant to a distribution agreement
between the Trust and FDI, FDI has the exclusive right to distribute shares of
the Funds. FDI may enter into dealer or agency agreements with broker-dealers or
other financial intermediaries, including affiliates of the Investment Adviser,
for the sale of Fund shares. FDI receives no fee from the Trust under the
distribution agreement for acting as Distributor to the Trust. From time to time
and out of its own resources, the Investment Adviser, the Distributor, or either
of their affiliates, may pay fees to broker-dealers or other persons for
distribution or other services related to the Funds.

The distribution agreement will continue in effect only if such continuance is
specifically approved at least annually by a vote of the Board of Trustees,
including a majority of Non-Interested Trustees who have no direct or indirect
financial interest in the agreement. The Funds may terminate the distribution
agreement on 60 days' prior written notice without penalty. Termination by the
Funds may be by vote of a majority of the Board of Trustees, or a majority of
the Non-Interested Trustees, or by a majority of the outstanding voting
securities of the Funds. The agreement terminates automatically in the event of
its "assignment" as defined in the 1940 Act.

CUSTODIAN
State Street also serves as the custodian (in this capacity, the "Custodian") to
each fund pursuant to a custodian agreement between the Trust and State Street.
State Street is also the custodian with respect to the custody of any foreign
securities held by each funds. State Street has in turn entered into additional
agreements with financial institutions located in foreign countries with respect
to the custody of such securities. Under the custodian agreement, the Custodian
(i) maintains a separate account in the name of each Fund, (ii) holds and
transfers portfolio securities on account of each Fund, (iii) accepts receipts
and makes disbursements of money on

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behalf of each Fund, (iv) collects and receives all income and other payments
and distributions on account of each Fund's securities and (v) makes periodic
reports to the Board of Trustees concerning each Fund's operations.

TRANSFER AND DIVIDEND DISBURSING AGENT
[PFPC Global Fund Services (the "Transfer Agent"), 4400 Computer Drive,
Westborough, MA 01581], serves as the transfer and dividend disbursing agent for
the Funds pursuant to a transfer agency agreement with the Trust, under which
the Transfer Agent (i) issues and redeems shares of the Funds, (ii) addresses
and mails all communications by the Funds to its record owners, including
reports to shareholders, dividend and distribution notices and proxy materials
for its meetings of shareholders, (iii) maintains shareholder accounts, (iv)
responds to correspondence by shareholders of the Funds and (v) makes periodic
reports to the Board of Trustees concerning the operations of the Funds.

OTHER EXPENSES
The Trust pays the expenses of its operations, including the costs of
shareholder and board meetings; the fees and expenses of blue sky and pricing
services, independent auditors, counsel, the Custodian and the Transfer Agent;
reports and notices to shareholders; the costs of calculating net asset value;
brokerage commissions or transaction costs; taxes; interest; insurance premiums;
Investment Company Institute dues; and the fees and expenses of qualifying the
Funds and its shares for distribution under federal and state securities laws.
In addition, the Funds pays for typesetting, printing and mailing proxy
material, prospectuses, statements of additional information, notices and
reports to existing shareholders, and the fees of the Non-Interested Trustees.
The Funds are also liable for such nonrecurring expenses as may arise, including
costs of any litigation to which the Trust be a party, and any obligation it may
have to indemnify the Trust's officers and trustees with respect to any
litigation. The Trust's expenses generally are allocated among its investment
portfolios (such as the Funds) on the basis of relative net assets at the time
of allocation, except that expenses directly attributable to a particular
investment portfolio are charged to that portfolio. The Trust's service
providers may voluntarily waive all or a portion of their respective fees from
time to time.

DISTRIBUTION SERVICES ARRANGEMENTS
The Funds have adopted a Service Plan with respect to its Class A Shares
pursuant to which it uses its assets to finance activities relating to the
provision of certain shareholder services. Under the Service Plan, the
Distributor is paid an annual service fee at the rate of 0.25% of the value of
average daily net assets of the Class A Shares of the Funds. Each Fund has also
adopted a Service and Distribution Plan with respect to its Class B Shares,
pursuant to which it uses its assets to finance activities relating to the
distribution of its shares to investors and provision of certain shareholder
services. Under the Service and Distribution Plan for Class B Shares, the
Distributor is paid an annual service fee of 0.25% of the value of average daily
net assets of the Class B Shares of each Fund and an annual distribution fee at
the rate of 0.75% of the value of average daily net assets of the Class B Shares
of each Fund. The Plan compensates the Distributor regardless of its expenses.

Under the terms of the Service Plan and the Service and Distribution Plan
(collectively, the "Plans"), each Plan continues from year to year, provided
such continuance is approved annually

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<PAGE> 56

by vote of the Board of Trustees, including a majority of the Non-Interested
Trustees who have no direct or indirect financial interest in the operation of
that Plan. The Plans may not be amended to increase the amount to be spent for
the services provided by the Distributor without shareholder approval, and all
amendments of the Plans also must be approved by the Board of Trustees in the
manner described above. Each Plan may be terminated at any time, without
penalty, by vote of a majority of the Non-Interested Trustees or by a vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the relevant class of the respective Funds on not more than 30 days' written
notice to the Distributor.

The Board of Trustees has determined that the Plans will benefit the Funds and
its shareholders by (i) providing an incentive for broker or bank personnel to
provide continuous shareholder servicing after the time of sale; (ii) retaining
existing accounts; (iii) facilitating portfolio management flexibility through
continued cash flow into the Funds; and (iv) maintaining a competitive sales
structure in the mutual fund industry.

With respect to Class B Shares of the Funds, the Distributor expects to pay
sales commissions to dealers authorized to sell the Funds' Class B Shares at the
time of sale. The Distributor will use its own funds (which may be borrowed) to
pay such commissions pending repayment by the relevant Plan. In addition, the
Investment Adviser may use its own resources to make payments to the Distributor
or dealers authorized to sell the Funds' shares to support their sales efforts.

DIVIDENDS AND TAXES

DIVIDENDS
It is currently contemplated that dividends of the Funds' net investment income
will be declared daily and paid annually. No dividends will be declared for a
Fund on any day on which such Fund does not receive dividends or interest income
from the securities in its portfolio. In addition, any dividends declared will
be net of Fund expenses accrued to date. In the event the Board of Trustees
changes the daily dividend policy, shareholders will be notified.

CAPITAL GAIN DISTRIBUTIONS
If a Fund realizes any net capital gain, such gain will be distributed at least
once during the year as determined by the Board of Trustees. Short-term capital
gain distributions by a Fund are taxable to shareholders as ordinary income, not
as capital gain. Long-term capital gains realized by non-corporate taxpayers are
subject to a reduced maximum tax rate. Any realized capital loss to the extent
not offset by realized capital gain will be carried forward.

TAX STATUS OF THE TRUST
Each Fund intends to meet the requirements of the Code applicable to regulated
investment companies and to distribute all of its investment company taxable
income and net realized gain, if any, to shareholders. Accordingly, it is not
anticipated that the Funds will be liable for federal income or excise taxes to
which it would otherwise be subject. Qualification as a regulated investment
company does not, of course, involve governmental supervision of management or
investment practices or policies.

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<PAGE> 57

To qualify as a regulated investment company, each Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock, securities or foreign currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) diversify its holdings so that, at the end of each
quarter of the taxable year, (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items (including receivables), U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities of any one issuer limited for
the purposes of this calculation to an amount not greater than 5% of the value
of the Fund's total assets and not greater than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its total
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies); and (c) distribute at least 90% of its investment company taxable
income (which includes, among other items, dividends, interest and the excess of
net short-term capital gains over net long-term capital losses) and its net
tax-exempt interest income each taxable year, if any.

As a regulated investment company, each Fund generally will not be subject to
U.S. federal income tax on its investment company taxable income and net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, that it distributes to shareholders. Each Fund intends to
distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a nondeductible 4% excise tax. To prevent imposition of the
excise tax, each Fund must distribute during each calendar year an amount equal
to the sum of (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses, as prescribed by the Code) for the one-year period ending on October 31
of the calendar year, and (3) any ordinary income and capital gains for previous
years that was not distributed during those years. A distribution will be
treated as paid on December 31 of the current calendar year if it is declared by
a Fund in October, November or December with a record date in such a month and
paid by such Fund during January of the following calendar year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received. To prevent application of the excise tax, each Fund
intends to make its distributions in accordance with the calendar year
distribution requirement.

Each Fund will be treated as a separate entity from any other investment
portfolio of the Trust for tax purposes.

OTHER TAX INFORMATION
The Transfer Agent will send each shareholder a notice in January describing the
tax status of dividend and capital gain distributions (where applicable) for the
prior year.

It is expected that a portion of each Fund's dividends from net investment
income will be eligible for the dividends received deduction for corporate
shareholders. The amount of such dividends eligible for the dividends received
deduction is in general, limited to the amount of qualifying

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<PAGE> 58

dividends from domestic corporations received during the Fund's fiscal year. You
should consult with your tax adviser in this regard.

Any dividend or distribution received by a shareholder on shares of a Fund will
have the effect of reducing the NAV of the shares by the amount of the dividend
or distribution. Furthermore, a dividend or distribution made shortly after the
purchase of shares by a shareholder, although in effect a return of capital to
that particular shareholder, would be taxable to the shareholder as described
above.

Dividends declared in October, November or December to shareholders of record
and paid during the following January are treated as paid on December 31 for
federal income and excise tax purposes. Each Fund may adjust the schedule for
dividend reinvestment for the month of December to assist in complying with
reporting and minimum distribution requirements contained in the Code.

Redemptions of Fund shares are taxable events, and, accordingly, shareholders
may recognize gains or losses on such transactions. Except for dealers, any such
gains or losses will be capital gains or losses, and will be long-term capital
gains or losses if such shares were held for more than 12 months. In the case of
an individual, any such capital gain will be taxable at the maximum rate of 20%.
In the case of a corporation, long-term capital gain is taxable at the same
rates as ordinary income. A loss realized on a redemption of Fund shares will be
disallowed if other shares of the same Fund are acquired (whether through
dividend reinvestment or otherwise) within a 61-day period beginning 30 days
before and ending 30 days after the date the shares are redeemed. In such case,
the basis of the shares acquired will be adjusted to reflect the disallowed
loss. If a shareholder holds shares for six months or less and during that
period receives a distribution taxable to the shareholder as a capital gain, any
loss realized on the sale of the shares during that six-month period would be a
long-term capital loss to the extent of the distribution.

Each Fund generally is required by law to withhold 31% ("back-up withholding")
of certain dividends, distributions of capital gains and redemption proceeds
paid to certain shareholders who do not furnish a correct taxpayer
identification number (in the case of individuals, a social security number and
in the case of entities, an employer identification number) and in certain other
circumstances. Any tax withheld as a result of backup withholding does not
constitute an additional tax imposed on the shareholder of the account, and may
be claimed as a credit on such shareholder's federal income tax return. You
should consult your own tax adviser regarding the withholding requirement.
Dividends (but not distributions of long-term capital gain) paid to foreign
investors generally will be subject to a 30% (or lower treaty rate) withholding
tax.

The information above, together with the information set forth in the Prospectus
and this SAI, is only a summary of some of the federal income tax consequences
generally affecting each Fund and its shareholders, and no attempt has been made
to present a detailed explanation of the tax treatment of the Funds or to
discuss individual tax consequences. In addition to federal income taxes,
shareholders may be subject to state and local taxes on Fund distributions and
on redemptions or other dispositions of shares of the Funds, and shares may be
subject to state and local personal property taxes. Investors should consult
their tax advisers regarding specific

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<PAGE> 59

questions as to federal, state and local taxes or to determine whether one or
more of the Funds are suitable to their particular tax situation.

Foreign shareholders should consult their tax advisers regarding foreign tax
consequences applicable to their purchase of Fund shares.

INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS
The Trust's independent auditors, [ ], [address], audit and report on the Funds'
annual financial statements, review certain regulatory reports and the Funds'
federal income tax returns, and perform other professional accounting, auditing,
tax and advisory services when engaged to do so by the Trust. Shareholders will
receive audited annual financial statements and unaudited semi-annual financial
statements.

SHARE PRICE CALCULATION

The price of each Fund's shares on any given day is the Fund's net asset value
("NAV") per share. NAV per share is calculated for the Funds on each day that
the New York Stock Exchange (the "NYSE") is open. Currently, the NYSE is closed
on weekends and New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

Securities traded on a national securities exchange or on NASDAQ for which there
were no sales on the date of valuation and securities traded on other
over-the-counter markets, including listed securities for which the primary
market is believed to be over-the-counter, are valued at the mean between the
most recently quoted bid and asked prices. Options will be valued at market
value or fair value if no market exists. Futures contracts will be valued in
like manner, except that open futures contract sales will be valued using the
closing settlement price or, in the absence of such a price, the most recently
quoted asked price. Restricted securities and securities and assets for which
market quotations are not readily available are valued at fair value by the
Investment Adviser under the supervision of the Board of Trustees. Debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, unless the Board of Trustees determines that such valuation does not
constitute fair value at that time. Under this method, such securities are
valued initially at cost on the date of purchase (or the 61st day before
maturity) and amortizing any discount or premium over the period until maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.

All cash, receivables and current payables are carried on each Fund's books at
their face value. Other assets, if any, are valued at fair value as determined
in good faith in accordance with procedures adopted by the Board of Trustees.

In determining the approximate market value of portfolio investments, the Trust
may employ outside organizations, which may use matrix or formula methods that
take into consideration market indices, matrices, yield curves and other
specific adjustments. This may result in the securities being valued at a price
different from the price that would have been determined had the matrix or
formula methods not been used.

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ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

PURCHASES

GENERAL. Shares of the Funds are sold on a continuous basis by the Distributor.

As described in the Prospectus, shares of the Funds may be purchased in a number
of different ways. Such alternative sales arrangements permit an investor to
choose the method of purchasing shares that is most beneficial depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. An investor may place orders directly through
the Transfer Agent or through arrangements with his/her authorized broker.

The minimum initial investment in shares of each Fund is $1,000. The minimum
subsequent investment is $250. Minimum requirements may be imposed or changed at
any time and each Fund may waive minimum investment requirements in its
discretion.

PURCHASES IN KIND. Payment for shares may, in the discretion of the Investment
Adviser, be made in the form of securities that are permissible investments for
the relevant Fund as described in the Prospectus. For further information about
this form of payment please contact the Transfer Agent. In connection with an
in-kind securities payment, the Fund will require, among other things, that the
securities (a) meet the investment objectives and policies of the Fund; (b) are
acquired for investment and not for resale; (c) are liquid securities that are
not restricted as to transfer either by law or liquidity of markets; (d) have a
value that is readily ascertainable by a listing on a nationally recognized
securities exchange; and (e) are valued on the day of purchase in accordance
with the pricing methods used by the Fund and that the Fund receive satisfactory
assurances that (i) it will have good and marketable title to the securities
received by it; (ii) that the securities are in proper form for transfer to the
Fund; and (iii) adequate information will be provided concerning the basis and
other tax matters relating to the securities.

RETIREMENT PLANS. Shares of the Funds may be purchased in connection with
various types of tax deferred retirement plans, including individual retirement
accounts ("IRAs"), qualified plans, deferred compensation for public schools and
charitable organizations (403(b) plans) and simplified employee pension IRAs. An
individual or organization considering the establishment of a retirement plan
should consult with an attorney and/or an accountant with respect to the terms
and tax aspects of the plan. A $10.00 annual custodial fee is also charged on
IRAs. This custodial fee is due by December 15 of each year and may be paid by
check or shares liquidated from a shareholder's account.

REDEMPTIONS

SUSPENSION. The Funds reserve the right to suspend or postpone redemptions
during any period when: (i) trading on the NYSE is restricted by applicable
rules and regulations of the SEC; (ii) the NYSE is closed other than for
customary weekend and holiday closings; (iii) the SEC has by order permitted
such suspension or postponement for the protection of the shareholders; or (iv)
an emergency, as determined by the SEC, exists, making disposal of portfolio
securities or valuation of net assets of the Funds not reasonably practicable.

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INVOLUNTARY REDEMPTIONS. Each Fund may involuntarily redeem an investor's shares
if the net asset value of such shares is less than $1,000; provided that
involuntary redemptions will not result from fluctuations in the value of an
investor's shares. A notice of redemption, sent by first-class mail to the
investor's address of record, will fix a date not less than 30 days after the
mailing date, and shares will be redeemed at the net asset value at the close of
business on that date unless sufficient additional shares are purchased to bring
the aggregate account value up to $1,000 or more. A check for the redemption
proceeds payable to the investor will be mailed to the investor at the address
of record.

REDEMPTIONS IN KIND. If the Board of Trustees determines that existing
conditions make cash payments undesirable, redemption payments may be made in
whole or in part in securities or other property, valued for this purpose as
they are valued in computing the Fund's NAV. Shareholders receiving securities
or other property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences. An in
kind distribution of portfolio securities will be less liquid than cash. The
shareholder may have difficulty in finding a buyer for portfolio securities
received in payment for redeemed shares. Portfolio securities may decline in
value between the time of receipt by the shareholder and conversion to cash. A
redemption in kind of a Fund's portfolio securities could result in a less
diversified portfolio of investments for the Fund and could affect adversely the
liquidity of the Fund's portfolio.

REDEMPTION FEE -- A SHARES. In general, A Shares the Funds may be redeemed at
net asset value. However, A Shares of the Funds held for 180 days or less are
redeemable at a price equal to 99.25% of the then-current NAV of A Shares (the
"discount"). This discount, referred to in the Prospectus and this Statement of
Additional Information as a redemption fee, directly affects the amount a
shareholder who is subject to the discount receives upon redemption. It is
intended to encourage long-term investment in the Funds, to avoid transaction
and other expenses caused by early redemptions and to facilitate portfolio
management. The fee, which is paid to the Funds, is not a deferred sales charge,
and is not a commission paid to the Investment Adviser or its subsidiaries. The
Funds reserve the right to modify the terms of or terminate this fee at any
time.

PERFORMANCE

The historical performance calculation for each Fund may be shown in the form of
"total return" or "yield." These various measures of performance are described
below.

Quotations of performance may from time to time be used in advertisements, sales
literature, shareholder reports or other communications to shareholders or
prospective investors. All performance information supplied by the Funds is
historical and is not intended to indicate future returns. Each Fund's total
return and yield fluctuate in response to market conditions and other factors.
The value of a Fund's shares when redeemed may be more or less than their
original cost.

In performance advertising, the Funds may compare their performance information
with data published by independent evaluators such as Morningstar, Inc., Lipper
Analytical Services, Inc.,

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<PAGE> 62

or other companies that track the investment performance of investment companies
("Fund Tracking Companies"). The Funds may also compare any of their performance
information with the performance of recognized stock, bond and other indexes,
including but not limited to the Russell 2000 Index, Dow Jones Industrial
Average, Standard & Poor's 500 Composite Stock Index, Morgan Stanley - Europe,
Australian and Far East Index, Lehman Brothers Intermediate Government Index,
Lehman Brothers Intermediate Government/Corporate Index, Salomon Brothers Bond
Index, Shearson Lehman Bond Index, U.S. Treasury bonds, bills or notes and
changes in the Consumer Price Index as published by the U.S. Department of
Commerce. The Funds may refer to general market performances over past time
periods such as those published by Ibbotson Associates (for instance, its
"Stocks, Bonds, Bills and Inflation Yearbook"). In addition, the Funds may refer
in such materials to mutual fund performance rankings and other data published
by Fund Tracking Companies. Performance advertising may also refer to
discussions of the Funds and comparative mutual fund data and ratings reported
in independent periodicals, such as newspapers and financial magazines.

TOTAL RETURN CALCULATIONS
Standardized total returns quoted in advertising and sales literature reflect
all aspects of a Fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the Fund's net asset value per
share over the period. Average annual returns are calculated by determining the
growth or decline in value of a hypothetical historical investment in a Fund
over a stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative return of
100% over ten years would produce an average annual return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis in ten
years. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that the performance is not
constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of a Fund.

Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment, over such periods
according to the following formula:

P(1+T)n = ERV

Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years ERV = ending redeemable value:
ERV is the value, at the end of the applicable period, of a
hypothetical $1,000 payment made at the beginning of the
applicable period.

In addition to average annual returns, the Funds may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Total returns may be broken down into their components of
income and capital (including capital gain and changes in share price) in order
to illustrate the relationship of these factors and their

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contributions to total return. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration. Period total return is calculated according to the following
formula:

PT = (ERV/P-1)

Where:
PT = period total return.
The other definitions are the same as in average annual total
return above.

SEC YIELD CALCULATIONS
Although published yield information is useful to investors in reviewing each
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Funds of future yields or rates of return on
each Fund's shares. The yields of the Funds are not fixed or guaranteed, and an
investment in the Funds is not insured or guaranteed. Accordingly, yield should
not be used to compare the Funds with investment alternatives, like money market
instruments or bank accounts, that may provide a fixed rate of interest. Also,
it may not be appropriate to compare each Fund's yield information directly to
similar information regarding investment alternatives which are insured or
guaranteed.

Standardized yields for the Funds used in advertising are computed by dividing
each Fund's dividend and interest income (in accordance with specific
standardized rules) for a given 30 days or one month period, net of expenses, by
the average number of shares entitled to receive distributions during the
period, dividing this figure by each Fund's NAV per share at the end of the
period and annualizing the result (assuming compounding of income in accordance
with specific standardized rules) in order to arrive at an annual percentage
rate. Capital gain and loss generally are excluded from these calculations.

Income calculated for the purpose of determining each Fund's standardized yield
differs from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed in
yield calculations, the yield quoted for a Fund may differ from the rate of
distribution the Fund paid over the same period or the rate of income reported
in the Fund's financial statements.

OTHER ADVERTISEMENT MATTERS
The Funds may advertise other forms of performance. For example, the Funds may
quote unaveraged or cumulative total returns reflecting the change in the value
of an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions over any time period.

The Funds may also include various information in its advertisements.
Information included in a Fund's advertisements may include, but is not limited
to (i) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument, by location of
issuer, industry or by maturity, (ii) statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds that may be
employed by an investor to meet specific financial goals, such as funding
retirement, paying for children's education and

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<PAGE> 64

financially supporting aging parents, (iii) information regarding the effects of
automatic investment and systematic withdrawal plans, including the principle of
dollar cost averaging, (iv) descriptions of the Fund's portfolio manager(s) and
the portfolio management staff of the Investment Adviser or summaries of the
views of the portfolio managers with respect to the financial markets, (v) the
results of a hypothetical investment in a Fund over a given number of years,
including the amount that the investment would be at the end of the period, (vi)
the effects of investing in a tax-deferred account, such as an individual
retirement account or Section 401(k) pension plan and (vii) the net asset value,
net assets or number of shareholders of the Fund as of one or more dates.

The Funds may advertise information regarding the effects of periodic
investment, including the principle of dollar cost averaging. In a dollar cost
averaging program, an investor invests a fixed dollar amount in a Fund at
periodic intervals, thereby purchasing fewer shares when prices are high and
more shares when prices are low. While such a strategy does not ensure a profit
or guard against a loss in a declining market, the investor's average cost per
share can be lower than if fixed numbers of shares had been purchased at those
intervals. In evaluating such a plan, investors should consider their ability to
continue purchasing shares through periods of low price levels. For example, if
an investor invests $100 a month for a period of six months in a Fund, the
following will be the relationship between average cost per share ($14.35 in the
example given) and average price per share:

Systematic Share Shares
Period Investment Price Purchased
------ ---------- ----- ---------
1 $100 $10 10.000
2 $100 $12 8.333
3 $100 $15 6.666
4 $100 $20 5.000
5 $100 $18 5.555
6 $100 $16 6.250
---- ------ ------
Total Invested $600 Avg. Price $15.17 Total Shares 41.804

SHAREHOLDER INFORMATION

MASSACHUSETTS BUSINESS TRUST
The Trust is a Massachusetts business trust of which the Funds are series. A
copy of the Agreement and Declaration of Trust of the Trust (the "Declaration of
Trust") is on file in the office of the Secretary of The Commonwealth of
Massachusetts. Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. However, the Declaration of Trust provides that the shareholders
will not be subject to any personal liability for the acts or obligations of the
Funds and that every written agreement, obligation, instrument or undertaking
made on behalf of the Funds will contain a provision to the effect that the
shareholders are not personally liable thereunder. In light of this provision,
Massachusetts law and the nature of the Trust's business, the Investment Adviser
believes that the risk of personal liability to shareholders is extremely
remote.

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<PAGE> 65

The Declaration of Trust further provides that no trustee, officer, employee or
agents of the Trust is liable to any third persons in connection with the
affairs of the Funds, except as such liability may arise from his or its own bad
faith, willful misfeasance, gross negligence or reckless disregard of his or its
duties to such third persons ("disabling conduct"). It also provides that all
third persons must look solely to Fund property for satisfaction of claims
arising in connection with the affairs of the Funds. The Declaration of Trust
provides that a trustee, officer, employee or agent is entitled to be
indemnified against all liability in connection with the affairs of the Funds,
except liabilities arising from disabling conduct.

DESCRIPTION OF SHARES
Each Fund represents a separate series of shares of beneficial interest of the
Trust. Fund shares are further divided into separate classes.

The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares of one or more series and classes within any series
and to divide or combine the shares of any series without changing the
proportionate beneficial interest of each shareholder in the Funds.

Each share of a Fund represents an equal proportional interest in that Fund with
each other share of the same class. Upon liquidation of a Fund, holders are
entitled to share pro rata in the net assets of the Fund available for
distribution to such shareholders. Shares of the Funds have no preemptive or
conversion rights.

The shareholders of the Trust are entitled to one full or fractional vote for
each dollar or fraction of a dollar invested in shares. Subject to the 1940 Act,
the Trustees have the power to fix the number of Trustees, fill vacancies in the
Trustees, including vacancies arising from an increase in the number of
Trustees, and remove Trustees with or without cause, subject to certain removal
procedures. However, immediately after such appointment, the requisite majority
of the Trustees must have been elected by the shareholders of the Trust. The
voting rights of shareholders are not cumulative. The Trust does not intend to
hold annual meetings of shareholders. The Trustees may call meetings of
shareholders for action by shareholder vote if required by law, the Declaration
of Trust, or the Trust's By-Laws.

Shareholders of the Trust have the right, upon the declaration in writing or
vote of shareholders whose shares represent two-thirds of the outstanding shares
of the Trust, to remove a Trustee. The Trustees will call a meeting of
shareholders to vote on removal of a Trustee upon the written request of the
shareholders whose shares represent 10% of the outstanding shares of the Trust.
The Trustees also are required, under certain circumstances, to assist
shareholders in communicating with other shareholders.

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<PAGE> 66
PART C

OTHER INFORMATION

Item 23. Exhibits.

Exhibit No. Description of Exhibit

(a) Agreement and Declaration of Trust (filed herewith)

(b) Bylaws (filed herewith)

(c) Instruments Defining Shareholder Rights (incorporated by
reference to Exhibits a and b to the Registration Statement
above)

(d) Investment Advisory Agreement (to be filed by amendment)

(e) (1) Distribution Agreement (to be filed by amendment)

(2) Form of Agency Selling Agreement (to be filed by amendment)

(f) Inapplicable

(g) (1) Custody Agreement (to be filed by amendment)

(h) (1) Transfer Agency and Dividend Disbursing Agency Agreement (to be
filed by amendment)

(2) Administration Agreement (to be filed by amendment)

(i) Opinion and Consent of Ropes & Gray as to legality of the
securities being registered (to be filed by amendment)

(j) Inapplicable

(k) Inapplicable

(l) Subscription Agreement (to be filed by amendment)

(m) (1) Distribution Plans (to be filed by amendment)

(2) Form of Services Agreement (to be filed by amendment)

(n) Rule 18f-3 Plan (to be filed by amendment)

(p) Codes of Ethics (to be filed by amendment)

Item 24. Persons Controlled by or under Common Control with Registrant.

Not applicable.

Item 25. Indemnification.

As permitted by Sections 17(h) and (i) of the Investment Company Act of
1940, as amended (the "Investment Company Act"), Article VIII of the Agreement
and Declaration of Trust (Exhibit (a) to the Registration Statement) and Article
10 of the Trust's Bylaws (Exhibit (b) to the Registration Statement) provides
for the indemnification of Registrant's trustees and officers. No
indemnification is provided with respect to any liability where the basis for
such liability is willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of office.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to trustees,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such

<PAGE> 67

indemnification is against public policy as expressed in the Investment Company
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such trustee,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Investment Company Act and will be governed by the final
adjudication of such issue.

The Registrant and its Trustees, officers and employees are insured,
under a policy of insurance maintained by the Registrant, within the limits and
subject to the limitations of the policy, against certain expenses in connection
with the defense of actions, suits or proceedings, and certain liabilities that
might be imposed as a result of such actions, suits or proceedings, to which
they are parties by reason of being or having been such Trustees or officers.
The policy expressly excludes coverage for any Trustee or officer for any claim
arising out of any fraudulent act or omission, any dishonest act or omission or
any criminal act or omission of the Trustee or officer.

The Investment Advisory Agreement and Distribution Agreement (to be
filed by amendment) provide for indemnification. The general effect of these
provisions is to indemnify entities contracting with the Trust against liability
and expenses in certain circumstances. This description is modified in its
entirety by the provisions of the agreement.

The Registrant hereby undertakes that it will apply the indemnification
provisions of its Bylaws and the Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the
Investment Company Act as long as the interpretation of Section 17(h) and 17(i)
of such Act remains in effect and is consistently applied.

Item 26. Business and Other Connections of Investment Adviser.

Lee Munder Investments, Ltd. is the Trust's Investment Adviser.

Name Position with Investment Adviser

Lee Munder Investments, LLC General Partner
Lee Munder Capital Group, LLC General Partner
Lee Munder Capital Group, LP Limited Partner
Ryan J. Munder Marketing Manager
Adam L. Munder Marketing Manager

For further information relating to the Investment Adviser's personnel,
reference is made to Form ADV filed under the Investment Advisers Act of 1940 by
Lee Munder Investments, Ltd. See File No. 801-57397.

Item 27. Principal Underwriters.

(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following other investment companies.

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+ Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.

<PAGE> 68

Dresdner RCM Investment Funds Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
TD Waterhouse Family of Funds, Inc.
TD Waterhouse Trust

Funds Distributor is registered with the Securities and Exchange Commission
as a broker-dealer and is a member of the National Association of Securities
Dealers. Funds Distributor is an indirect wholly-owned subsidiary of Boston
Institutional Group, Inc., a holding company all of whose outstanding shares are
owned by key employees.

(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.

Director, President and Chief Executive Officer - Marie E. Connolly
Director and Executive Vice President - George A. Rio
Executive Vice President and Chief
Administrative Officer - Gary S. MacDonald
Executive Vice President - William S. Nichols
Executive Vice President - Charles W. Carr
Senior Vice President, General Counsel, Chief
Compliance Officer, Secretary and Clerk - Margaret W. Chambers
Senior Vice President and Treasurer - Joseph F. Tower III
Senior Vice President and Chief Financial Officer - William J. Stetter
Senior Vice President, Deputy General Counsel - Christopher J. Kelley
Senior Vice President - Mary A. Nelson
Senior Vice President - Eric A. Liik
Senior Vice President - John Lehning
Senior Vice President - John Prosperi
Chairman and Director - William J. Nutt

Item 28. Location of Accounts and Records.

All accounts, books and other documents required to be maintained pursuant
to Section 31(a) of the Investment Company Act and the Rules thereunder are
maintained at the offices of the Registrant, the offices of the Registrant's

<PAGE> 69

Administrators, Funds Distributor, Inc., 60 State Street, Suite 1300, Boston,
Massachusetts 02109 and State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, or (i) in the case of records concerning
custodial functions, at the offices of the Registrant's Custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110; (ii)
in the case of records concerning transfer agency functions, at the offices of
the Registrant's Transfer Agent and Dividend Disbursing Agent, PFPC Inc., 4400
Computer Drive, Westborough, Massachusetts 01581; (iii) in the case of records
concerning distribution and certain other functions, at the offices of the
Fund's Distributor, Funds Distributor, Inc., 60 State Street, Suite 1300,
Boston, Massachusetts 02109; and (iv) in the case of records concerning fund
accounting functions, at the offices of the Fund's fund accountant, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110.

Item 29. Management Services.

Not applicable.

Item 30. Undertakings.

Not applicable.

<PAGE> 70

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and The Commonwealth of
Massachusetts on the 18th day of August, 2000.

LMI FUNDS
Registrant

By /s/ Margaret Warner Chambers
---------------------------------
Margaret Warner Chambers
President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below on behalf of the following
persons in the capacities and on the date indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Margaret Warner Chambers President (Principal August 18, 2000
----------------------------- Executive Officer)
Margaret Warner Chambers

/s/ Christopher J. Kelley Treasurer (Principal Financial August 18, 2000
----------------------------- and Accounting Officer)
Christopher J. Kelley

/s/ Margaret Warner Chambers Trustee August 18, 2000
-----------------------------
Margaret Warner Chambers

/s/ Christopher J. Kelley Trustee August 18, 2000
-----------------------------
Christopher J. Kelley

<PAGE> 71

INDEX TO EXHIBITS
-----------------

(a) Agreement and Declaration of Trust

(b) Bylaws